Can I Trade My Car For a Different Vehicle and Lower Car Loan Payment?

Q: I have a PT Cruiser 2008 standard I bought but it is not paid for yet until 2012. I want to trade the car in with Chrysler for a lower note from $450 to $300. My question is how can I trade my car PT Cruiser to a Jeep Compass? I don’t want to lease a car. Can I trade the note with someone for a Jeep Compass?

Kim J. – Hayward, California

A: Yes you can! But first let’s understand what must happen to drop your monthly payments to $300 per month. With solid credit on a 60-month term, $300 per month pays back approximately $15,000 as a principle loan amount.

This means that after the purchase price of your next vehicle, and deducting the value for your PT Cruiser, and adding all registration fees plus the loan payoff of the PT Cruiser, and finally deducting any cash down (if any) that would reduce your total balance; after all this, the carry back of your new loan or the amount that you will be financing needs to be about $15,000, so that your payments calculate to approximately $300 per month.

Keep in mind that the main objective is to lower your monthly payment, so having an open mind as to the type of vehicle you are willing to purchase is important. Considering a two-year-old vehicle, even with higher than average miles, may be your best alternative. A two-year-old vehicle still qualifies for a 60-month term and because it has higher than average miles means that, the dealer probably owns it below market value, which will help you offset any negative equity (if any). Your good credit should get you the low interest rate. A two-year vehicle has already gone through the biggest depreciation, and this will help you in the long run.

Please consult a trusted auto retailer to guide you to the right vehicle that will meet your needs, while meeting the appropriate collateral requirements of a $15,000 auto loan. Make sure the vehicle also qualifies for a 60-month financing term.

Use your great relationship with your bank or credit union to help lower your monthly payments. Improve your chances of getting approved by agreeing to finance any negative equity outside the auto loan by making it a side note, a personal loan at a much lower term, if necessary. Good luck!

Agustin Vasquez, Jr. – General Manager, Mack Massey Chrysler Jeep Dodge, El Paso, Texas