I currently have an auto loan with my bank, but it's a luxuary car. Now I have a bigger family

My family will have an addition with a baby on the way, but my MINI will not be suitable for baby carseats, so we want to get a larger vehicle. The problem is that we want to get a cheaper car this time. So here's the equation:

This is an example:

currently have a $20,000 loan

but want to get a car for $15,000

let's say that my car does trade in for the current retail value of 20,000

what will the dealership give me ? meaning the difference?

I currently have an auto loan with my bank, but it's a luxuary car. Now I have a bigger family on its way...

Well, assuming your trade in value = your payoff, then it would basically be a wash. If you live in a sales tax credit state, you will not pay sales tax on the new purchase because they are figured by taking the Sales Price less the appraised value. Here is an example:

New car Sales Price: $15,000

Trade in value: $20,000

$15,000-$20,000= %26lt;$5,000%26gt;.

If you do not live in a tax credit state, then you will pay taxes on the full asking Sales Price of $15,000.

Keep in mind that websites such as kbb.com are typically inflated values and dealerships do not use Blue Book when determining a trade in. If you want a more accurate value, go to http://www.blackbookonline.com . You might also want to look into selling your car yourself, if you think you can sell it for more than your payoff. Good luck and you can email me if you have questions.

I currently have an auto loan with my bank, but it's a luxuary car. Now I have a bigger family on its way...

You will be better off to sell it yourself. Dealers never give enough for used cars. Check the value of you car at ---NADA or KellyBlueBook.com---- Also look in the newspaper and do a comparison with cars in your area of similar make model and condition of your car. Dealers give you a better deal when you trade up to a more expensive model, but never good when trading down.

I currently have an auto loan with my bank, but it's a luxuary car. Now I have a bigger family on its way...

Well without knowing what kind of car it is there's no way to know what it's worth. You'll never get retail when you trade in a car..you'll get the wholesale price only..which is usually about 20% less. If you owe 20,000 for it and they give you 15 for your car you have to still pay the difference. They will either add it to the new loan or you'll have to pay it in full. I would make extra payments to get the value of the car and the payoff around the same amount, then trade it in.