Question

Your old car has a value of

$1800. You want to buy a new car
with a sticker price of $19,750.
The dealer says she will take your
old car in trade and give you a loan
of $17,900. How much are you
actually paying for the new car? Is
it a good deal?

Answer 1

Calculating the actual cost:

Trade-in value: Subtract the trade-in value of your old car ($1,800) from the new car's sticker price ($19,750).

New car cost after trade-in = $19,750 - $1,800 = $17,950

Loan amount: Since the dealer's loan offer ($17,900) matches the new car cost after trade-in, you wouldn't be paying any additional money out of pocket.

Therefore, you're not actually paying anything beyond the trade-in of your old car.

Is it a good deal?

Assessing whether it's a good deal requires going beyond just the price and considering several factors:

Condition of the new car: Is it reliable, fuel-efficient, and meet your needs and preferences?

Interest rate on the loan: Are you getting a competitive rate?

Overall value and features: Does the car offer features and benefits that justify the price?