Car dealership ad that caught my attention...bait and switch or legit?

[S-L-A-C-K-E-R]

As you all may remember from about a year ago, I bought a purple car by accident. It's a used car that I bought private party. After 1 year of payments, I still owe $10,000. It's only worth 7,000 as a trade according to KBB (and that's in excellent condition...which it's not). So, I'm in the hole by 3,000 bucks (best case scenario :(<----- ironic that he's purple).

I saw a commercial from a local Toyota dealer saying they would pay off your trade no matter what you owe (plus they have the "saved by zero" 0% financing thing going on). Sounds too good to be true. Anyone go for that sort of deal and what came out of it? I would be willing to pay sticker price to compensate for a generous trade and a write off of the unpaid balance (even possibly just a partial write off would help a ton). I was thinking of going to the dealer just to check it out and run some numbers. Unfortunately, I feel like I'm falling for the old bait and switch though and I don't want to fall for that and I don't want to get too excited and say "screw it" at the dealer and drive home with a new car that has $3,000 tacked onto it's loan just so I don't have a purple car anymore.

[UfoPilot]

They will add the $3000 on to the new loan.

[Jon Silberman]

Exactly. That's why the only $# I care about when I buy a new car is net out-of-pocket cost. The dealership may have business reasons for preferring to structure the sale, taking into account trade in, interest rate, etc. in a certain way. A business buying a car may also. As a private individual, however, I don't care either way. Just tell me the net cost to drive the sucker home.

[S-L-A-C-K-E-R]

They will add the $3000 on to the new loan.

That's kind of what I'm figuring. Sure they will "pay off" the outstanding balance on the loan no matter how high it is, but they don't tell you in the commericial that they will then tack on the difference to your new loan. I think they're trying to reel in some suckers.

[jtm622]

Usually, the 0% financing is an "either/or" OPTION at a shorter term - and you forego any other promotions which they may have going on at the time if you opt for the 0% APR. If you are upside down in your "purple car", yes... they will simply add that "negative trade-in value" to your total loan amt to be financed...

[morlll]

Steal a car.

[TomK]

They will add the $3000 on to the new loan.

Yup. And then you are $3K upside down in your new car + depreciation of 20% as soon as you drive off lot. Not a good scenario.

[Smakutus]

Try and pay off the purple car as soon as you can..

Jeff

[stratman34]

Of course they aren't going to eat the difference between what they offer you for trade value and your payoff. They aren't going to give away their profit margin.

Problem is (and what a shameful problem it is) is that some folks are so upside down, they COULDN'T work a trade in. If you are $20k upside down, that would push a new vehicle far past the max of 125% of retail value that liberal banks would loan on a new vehicle. In the past, you would just have to bring a BIG check to makeup the difference. Now, with these "deals" they are willing to take the $20k, add it to the new vehicle (no matter what), and let you drive away with no money out of pocket.

Never mind that you are now at 140% of retail for your new payoff, and counting depreciation you probably could get 75-80% of retail, for a NET negative of 60%!!

CRAZY! But it's done everyday. Buy a new F350, zero down for $50k. Drive it 12 months, trade it in for $20k loss, buy another one with zero down. Finance $70k on the new one. I know someone who bought 5 consecutive vehicles this way. His response was, I don't care how much I own, only how big my monthly payment is... :messedup

[PA Woody]

GAP insurance is your friend.

[Rick51]

As you all may remember from about a year ago, I bought a purple car by accident. It's a used car that I bought private party. After 1 year of payments, I still owe $10,000. It's only worth 7,000 as a trade according to KBB (and that's in excellent condition...which it's not). So, I'm in the hole by 3,000 bucks (best case scenario :(<----- ironic that he's purple). ...

It's worse than that. Any dealer will tell you that KBB is high, nobody pays those prices if they know how to buy. No used car dealer could survive pricing everything at KBB retail.

A dealer is only going to allow rough wholesale book in most cases. They use regional auction data which is updated weekly, not KBB.

And yes, the dealer will not take a loss on your deal. They will "pack" your trade deficit right on top of the new car price. Hopefully, 0% financing will help you. Good luck!

[~Abstract~]

I'm still stuck on how you bought a purple car "on accident"...

[Bones]

Currently, you need a FICO score of about 1,000,000 to qualify for 0% financing, no one is giving money away for free anymore.

[xroads]

I'm still stuck on how you bought a purple car "on accident"...

Yeah, tell us the story. Are you color-blind or something?