January 07, 2006

Hi Tony

I have a 2004 Chrysler Concorde. I bought it in October, 2003. It had 33,000 miles on it when I got it.

Right now it has 89,000 miles on it. The car is worth $10,000, and my loan balance is $16,000.

I'm trying to trade it for a 2005 Magnum, and no dealership will deal with me unless I give them $5,000 up front along with my trade-in.

I can afford $2,500. What can I do?

Jeffery

Answer:

Hi Jeffery,

Your problem is that your car is not worth $10,000! It's actually worth about $6,000! Now I'm talking wholesale value, which is all a car dealer is going to give you on trade - in real money.

They might make it look more palatable for you on paper, but they can go to a dealer auction and buy an '04 Chrysler Concorde with 89,000 miles for about $6,000. They're not going to give you more than that just to be nice guys. it's business!

This is the reason they want so much cash down. In reality you are about $10,000 upside-down. A creative Finance Manager can hide a lot of negative equity, but $10,000 is a real stretch and almost impossible to overcome.

The thing is that if you do find someone to put a finance deal together your payments will be very high - like through t he roof, and that's after giving up a chunk of your hard earned cash. If you do manage to put a deal together there will be no trading of that vehicle, because you'll be even more upside-down than you are now.

Why don't you just drive the Concorde, get it paid off then start with a clean slate. You can only trade cars with negative equity so many times until you simply have to drive one until it's paid off. Do it now and keep your cash.

All my very best...

Tony Iorio