Being upside down — also called “underwater” or negative equity — means you haven’t finished paying off your existing vehicle and you still owe more on it than it’s worth as a trade-in or resale. Until recently, auto lenders were willing — often even happy — to allow you to add the remaining balance on your existing car to the loan you took out for the new car, but because of the economic conditions, they’re no longer anxious to do that. That rollover of the existing balance was so common that, judging by questions Bankrate receives from readers, people are likely to be surprised and disappointed to learn that they really do have to pay off the old loan. That is, instead of putting the cash rebate directly towards the new vehicle, buyers can use it towards paying off the loan on their trade-in. He says that in the fourth quarter of 2007, the age of the average trade-in was 68 months but by the fourth quarter of 2008 the average age jumped to 76 months from the year-ago quarter, or about 12 percent older. read more
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