Mods, I’m not sure if this is more a factual question or an opinion one, so please forgive me if you think this is more GQ than IMHO.
Knowledgeable dopers, please give me advice about when to trade in my car and how that works like you would a bright twelve-year-old.
Until my current vehicle, I’ve bought used cars for cash. Last March I bought a 2007 Nissan Versa that had been living on the car lot all that time, so despite its age it was a new car sale given I’m the first owner… I found the process bewildering and I want to know more the next time around. My car is okay, I guess, but I can’t help but imagine that I could get a newer car - with a good warranty - for not much more than the $250/month I’m paying for this one, though maybe only with a 60 month loan instead of my current 48 month loan. I’m not interested in leasing, ftr.
So, in March I will be 1/2 through my loan. The car needs no repairs other than turning off the stupid TPMS warning light staying on that apparently is a problem with most Versas (Walmart will do it for $20), I should probably order some touch-up paint for a scratch on the door handle, and the other common Versa problem with the dashboard plate over the passenger side airbag not fitting snuggly does apply too. But, beyond replacing the front tires and a taillight twice it’s never needed a part yet, so other than that my “service records” consist entirely of getting oil changes. Oh, the car just this week reach a milestone as well: 20,000 miles. Low miles, in very good repair, it should be a decent trade in.
Here’s where I’ll sound stupid(er)…
What exactly happens when you buy a car with a trade in you still owe money on? Let’s say I’ve paid $7,000 and owe $7,000 still, and intend to buy a car that costs $16,000, like a 2012 Ford Fit being offered across town. I’m pretty sure that I don’t owe $23,000. But do I end up owing more than $16,000 all together? If I don’t, why not? The $7000 on the original loan has to go somewhere, which is where I get confused.
After you explain this, if you want to give me other pointers too, feel free since it should be clear by now that I have no idea what I’m doing.
Other probably pertinent information when it comes to recommending when I buy another vehicle: given recent developments at my new job, my projected income for 2012 will likely be north of 3x what my 2011 income has been (and at least 2x even if the current proposal isn’t approved), moving my income from pitiful to not too bad. The dealership I got my current car from wanted the prior year’s income info, so I thought I’d mention that.
Thanks!