# How Trading In Early Can Lower Your Monthly Payment

By

## Senior Automotive Editor

Christian Gulliksen was the Senior Automotive Editor for CarsDirect. He was formerly a senior editor with Robb Report magazine, and has contributed to publications like Worth, Variety, The Hollywood Reporter and MarketingProfs.com.

, Senior Automotive Editor - June 10, 2013

You might think it's irresponsible to buy a new car before you've finished paying off the loan on your old car. But what if we said you could drive something new and free up extra cash in your monthly budget?

As unlikely as it sounds, with the right variables you can actually lower your payments when you trade in early. A few factors make this possible:

• Your trade-in is worth more when it's four years old with 60,000 miles than when it's five years old with 75,000 miles.
• If you only have a year or two left on a longer loan term, your car's value likely exceeds what you still owe.

Let's say you drive a 2009 Acura TSX with 60,000 miles. It's in very good condition, and Kelley Blue Book shows a trade-in value of \$15,175. You have a five-year loan with twelve more payments of \$600. And in a recent check at CarsDirect, you found a 2013 Acura TSX for \$29,914.

Now let's do some math. Assuming a total sale price of \$34,000 with tax and license, and a trade-in worth \$15,175, you end up with an \$18,825 balance due. To that we add the \$7,200 still owed on the old car for a total of \$26,025. With a low 0.9% interest rate from Acura, payments for your new five-year loan will be around \$450—saving you \$150 a month.

This example assumes a CarsDirect customer in California is shopping in June, 2013.

The math won't always work in your favor -- especially if your current car doesn't hold its value well. But why not take a few minutes to see if an early trade-in makes financial sense for you?

And remember: Your savings can get even better if your new car has a manufacturer rebate. So make a habit of checking the CarsDirect Deals section for the latest discounts and offers.

, Senior Automotive Editor

Christian Gulliksen was the Senior Automotive Editor for CarsDirect. He was formerly a senior editor with Robb Report magazine, and has contributed to publications like Worth, Variety, The Hollywood Reporter and MarketingProfs.com.

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