Right now I have a 2006 Nissan Sentra 1.8S with 34K miles on it, great condition, great car. I owe $11,800 and when I check out the trade in value its anywhere from 7900 to 9900. Lets say the trade comes in at $8000, can the left over 3800 be added onto the loan with the new car I am buying? How does this actually work? I'm suppose to go the dealership this week but dont want to waste my time if there is no hope.I don't want to come out of pocket for any money at all. Can sales tax and any other fees be wrapped up into the loan as well?


In the state of NY if that matters?

You are right, the leftover amount is called the "negative equity" or "upside down amount" and like you said it gets added to the price of the new car to form the total cost. Having negative equity in the deal almost always makes it hard to get approved for a loan on the total amount and/or causes a higher APR than you could get otherwise.

Trading when you're upside down is really not recommended unless you absolutely must have a different type of vehicle and there's no other choice. You end up paying part of each payment on the new deal going to pay for the car that you don't even have any more. It's very expensive in the long run to trade frequently.

I appreciate the quick reply. Basically I need a bigger car, otherwise I wouldnt. Right now I have a horrible rate at 24.99% but I can get it lowered with at least Wells Fargo, so do I approach Wells Fargo or whichever bank and let them know I have negative equity I want to add onto the new loan?

Would I have to come up with any money out of pocket for anything?

Lately, banks have been balking at deals with zero down and negative equity. Having some cash down will really improve things especially if your credit is not perfect.

You can just go to the dealer and have them handle finding a suitable loan. If you have credit problems it is better not to shop for car loans yourself. If you don't like the deal don't take it. You will suffer a bunch of inq's but that's also likely the case if you shop yourself.

Ideally you would sell the Sentra yourself, as even if you can't get enough to pay it off fully you should get considerably more than a dealer offers as a trade. If you don't get enough to pay it off you will need cash to cover the difference. Then buy a new car with no trade. Though in a "trade difference" state (don't know if NY is one or not), you do pay less tax on the new deal trading in than selling private. It probably won't be as much as the difference between trade and private sale value though.

I see, well when I got my loan I was 530 mid score now im 100 pooints higher..

You would have to qualify for the new loan you propose, and the loan amount would need to fit within the approving lenders quidelines.

yeah i checked with wells fargo they told me they will go to 140 % LTV of the new cars trade in value. So it really depends on what I can get for my current car.

that 140 can get eaten up before trade in value, after all you said you don't wanna put any cash into the equation. so you'll be financing taxes tags, dealer fees, so if the value of the car is 10k, that means you can only afford up to 4k total on the rest of the goodies that come with it. plus the negative equity you have with your current car.

Correct. I have been playing with the math. It really comes down to how much negative equity I will have which will be anywhere from 1200-4800 bucks, so if i can maximize what my trade in value I accept, and talk to the sales price down. I could have a pretty good deal, or I could be completely SOL. LOL

Thanks.

NY is one of them. Trading in my car, I paid taxes on 9K sale difference instead of the 19K sale price..

yep i am in NY