Tips on Buying Cars: Paying too much, loan balance, look at it this way

Question
Hello,


I have question. I was going over my contract and it says:

Gross trade in                        6900
less pay off made by seller  10000

equal net trade in (Minus)  -3100


Why is it the net trade in minus and positive? It seems trading in my car added to the price.

Thank you,

Elena

Answer
Your trade-in is worth $3100 lees than what you owe on it, and you must pay off the balance that the bank says you owe.  You can write your own check for $3100 to the bank and avoid having it added to the new loan balance, or the dealer can add it in to the new loan.  And yes, the fact that you owe more is adding to the cost of the new car.  Look at it this way: if you didn't trade the car in and decided to sell it to a neighbor for $6900, you'd still owe the bank $10000, and you'd have to come up with $3100 in cash on your own along with the $6900 from the neighbor in order to satisfy the loan.  The fact that you're trading it in makes no difference: the loan balance must be paid off one way or another.