A Little Buying Help (with the process)

[Efthreeoh]

Okay, while I've bought a lot of new cars from a dealership, I find myself in an area of no experience. I lack experience because I've never bought a new car using a trade-in for a down payment and more so, never a trade-in that has a small amount of lien left on the loan.

I'm remotely helping a friend buy a new car via an e-sign process. I've got the price negotiated, including the value of the trade-in. She is bringing her own approved financing from USAA rather than using the dealer's financing (which obviously they want her to do - LOL). She's trading in her current car and it has about $3,500 of lien left on her current loan, which is with USAA as well. Overall, she is using the equity in her trade-in as partial down payment on the new car and then adding in some more cash. So, what I don't know what (how it) works is how the dealership (or her) pays off the $3,500 lien on the current USAA loan. The net trade-in cash value will be $11,000.

My assumption is USAA just connects with the dealership and between the dealership and USAA the lien gets taken care of and is subtracted from the equity of the trade-in. It's a roadblock at the moment because the e-sign purchase contract lacks the detail of the financing and lien payoff. I've just never done this type of new car purchase transaction, so I just don't know the process.

Any advice is appreciated in advance.

[BlkGS]

That's exactly how it works. The dealership will call the bank and get a 5 or 10 day payoff amount for the trading in car. They'll deduct that from the trade allowance on the paperwork. If the payoff amount ends up being less than what they pay (example, they pay it in 1 day not 5 and less interest accumulates), the bank will send her a check for the overage.

[Efthreeoh]

Originally Posted by BlkGS

That's exactly how it works. The dealership will call the bank and get a 5 or 10 day payoff amount for the trading in car. They'll deduct that from the trade allowance on the paperwork. If the payoff amount ends up being less than what they pay (example, they pay it in 1 day not 5 and less interest accumulates), the bank will send her a check for the overage.

Perfect. Thanks for confirming. The dealership is a complete PITA; their customer service just sucks.

She bought the car off lease during COVID in 2021, so she got a lot of equity from that event. USAA is where she got the loan to buy it, and USAA was great (as one would expect) took care of the transaction from the lease to purchase. I figure they will do the same this time.

Appreciated.

[jkoral]

Going through something similar (also first time), but not USAA. In my case, I had a lien on my 2022 BMW from my credit union, I planned to trade in and applied for new loan at same credit union. When they funded the new loan, they immediately paid off my old one, an internal payoff. The old loan even disappeared from their portal though I've yet to actually trade in and pick up new car. Dealership confirms the lien is released on the trade in and credit union issued check for the difference.

Though I'm curious what would happen if I backed out of the purchase -- I assume they wouldn't restore my old loan (with low interest rate), maybe force me to refinance (after I return their check or they void it).

[Efthreeoh]

And we're done!

Thanks for the support, BlkGS and everyone. Mission accomplished.

[DubaiRich]

Congrats to her...and you for facilitating the process. What did she get?? Pics?

[Efthreeoh]

Originally Posted by DubaiRich

Congrats to her...and you for facilitating the process. What did she get?? Pics?

Thanks. She is quite happy. It was a small SUV, nothing special.