Have you ever wondered why...

...when you consider buying a new or used vehicle, one of the first things you do is to research the value of your current vehicle and compare that value to your existing loan balance?

...the urge to say "yes" is so strong when a dealership asks you "if we give you what you owe on your trade, can we earn your business today?"

...dealerships often ask what you are trading in before you can get a price on the car you want to buy?

...the allowance on your trade changes when you decide to buy a used vehicle instead of a new one?

...every dealership doesn't put their lowest price on the vehicle, new or used, for everyone to see?

The right way to buy...

To buy a car the right way, you need to determine the lowest possible price of the new or used vehicle you are buying or leasing before you bring your trade into the equation. Your trade has a real value and that value will not change considerably from one dealership to the next. What can change is the price of the car you are buying. Generally speaking, the more money you are offered for your trade above what it is actually worth will equal the increase in price of the vehicle you are buying. This is because the balance of the loan on your trade will not change no matter how much you are offered for the trade in.
For example: SATURN AURA
MSRP $26,820
Nice Price $25,070
Actual cash value of trade in $10,000
Loan balance on trade in $5000
 Scenario #1
Negotiated price of competitive model$28,975
(THIS NUMBER IS AFTER YOUR TRADE ALLOWANCE HAS BEEN DETERMINED)
Trade allowance $11,500
Trade difference $17,475
Loan balance on trade $5000
Amount of new loan $22,475
Cash down 0
Amount financed $22,475

Scenario #2
Nice Price of Aura $25,070
Trade allowance $10,000
Trade difference $15,070
Loan balance on trade $5000
Amount of new loan$20,070
Cash down 0
Amount financed $20.070
WHILE IT LOOKS LIKE YOU ARE GETTING AN ADDITIONAL $1500 FOR YOUR TRADE, YOU ARE REALLY GOING TO FINANCE $2400 MORE ON THE VEHICLE YOU ARE BUYING. THIS POTENTIALLY PUTS YOU IN A GREATER NEGATIVE EQUITY SITUATION, OR FUTHER "UPSIDE DOWN" ON YOUR NEXT PURCHASE.