Don't sell car for trade-in value

Dear Terry,
About 10 months ago I purchased a used SRT Neon for about $20,000 after fees. I now owe about $14,000 on it.

I plan to buy a condo that is right up the street from where I work, so I don't have far to drive. The insurance cost on these cars is outrageous and I could use the money to buy the condo. Trade-in value for the car is about $11,000 to $12,000. I was thinking about trading my car in for a beater worth a couple of grand so I can pay off the balance of the loan. Is that possible or do dealers turn down trade-ins like this?
-- Bob

Dear Bob,
You don't mention the model year of your SRT Neon, but if the trade-in value is as high as $12,000 you should be able to sell it privately for at least $14,000 to cover your loan. What you want to avoid is going to a dealer and trying to work some sort of deal where the dealer pays off your car and puts you into something cheaper.

The dealer is going to want to roll over the $2,000 difference in what you owe on the Neon and the trade-in value into the "beater'' you want to buy. In the end, you'll wind up owing far more on that beater than what it's worth. Sell the Neon privately and look for some basic transportation you can buy for cash. That will make buying that condo easier.

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