[Likeanowl]

Forgive me if this is some common sense question but I can’t seem to come up with a logical answer.

I owe a bit on my current F80 still, not a ton, just a few thousand. But I was wondering which way to go regarding the remaining balance. Would there be any benefit to trading it to the dealership and having them pay off the remaining balance vs me paying the balance off on my own then trading it in after? Let’s say the car is “worth” an even 40k (just using nice whole numbers for easy math). If I still owe 10k and they offer me 40, after they pay it off id get 30. But if I pay the remaining 10 off before I ever go to the dealership, then they offer me 40 I get the full 40. What would the difference between the two options be and is one any better than the other? Thanks a ton.

[SintAFM]

They'll roll the difference into your monthly payment if you still owe on the trade-in, so it can be credited as a down payment or principal.

Doesn't really matter at the end of the day theoretically

[kayt69]

Originally Posted by Likeanowl

Forgive me if this is some common sense question but I can't seem to come up with a logical answer.

I owe a bit on my current F80 still, not a ton, just a few thousand. But I was wondering which way to go regarding the remaining balance. Would there be any benefit to trading it to the dealership and having them pay off the remaining balance vs me paying the balance off on my own then trading it in after? Let's say the car is "worth" an even 40k (just using nice whole numbers for easy math). If I still owe 10k and they offer me 40, after they pay it off id get 30. But if I pay the remaining 10 off before I ever go to the dealership, then they offer me 40 I get the full 40. What would the difference between the two options be and is one any better than the other? Thanks a ton.

Hey,
Usually this is how it works on trade-in in most of the states in the US.
In your scenario, if you walk into dealership having 10k left on the payoff in your car; your dealer would be paying off remaining balance to your financed party and would be doing a tax write-off for the whole 40k amount into the new car meaning if your new car costs 80k in total, you would be only paying taxes for 40k although your new remaining balance after the new car purchase would be 50k after the 30k positive equity going into trade-in.

Hope this information helps, and good luck with your purchase!

[F12M6MD]

Really no difference other than loss of liquidity (if you last second changed your mind or needed cash) and possibly interest on your current loan (if payment made many days/weeks ahead). If you're guaranteed 40k either way, I'd just hold on to your cash.

Mark

[jimbethesda]

No difference. Easiest to trade it in and have the dealership pay off your remaining balance.

The most work, but you could get thousands more is to sell your car on your own.

[ROBERT1183]

No difference on a finance. If it was a lease its cheaper for them to buy it out. If you were to buy it out you would have to pay the tax on the buyout since you didnt pay tax on that money. Before trading it into the dealer reach out to some wholesale dealers near you and see what they offer. I got $64.5k for my 18 M3 comp 6speed. It was coming off lease. Only 3700 miles on. Dealers were offering $57k on trade. It was worth way more so i didnt trade it in. Since i didnt pay the tax on the buyout it was equal to me selling it privately for $68k

[merlin3008]

Originally Posted by ROBERT1183

No difference on a finance. If it was a lease its cheaper for them to buy it out. If you were to buy it out you would have to pay the tax on the buyout since you didnt pay tax on that money. Before trading it into the dealer reach out to some wholesale dealers near you and see what they offer. I got $64.5k for my 18 M3 comp 6speed. It was coming off lease. Only 3700 miles on. Dealers were offering $57k on trade. It was worth way more so i didnt trade it in. Since i didnt pay the tax on the buyout it was equal to me selling it privately for $68k

This ^^^^

Everyone here is correct. It doesn't matter when or who pays off that last few thousand. Either way, the net winds up going towards your new ride. But with the used car market what it is right now, I would strongly suggest that you pay it off yourself and then list the car for private party sale. It is a bit more work, but the numbers I've seen out there for used metal are crazy! I sold my 2019 C43 AMG yesterday for $51k. I only paid $56k for it in late 2018. The dealer offered my $44k which was a very fair price, but I'd rather make that extra money myself and make my new G80 purchase even easier. At a minimum, run your current car through Driveway.com or Carvana to see what others are offering. Driveway is offering the best prices right now from what I can see.

[Mperor]

Originally Posted by merlin3008

This ^^^^

Everyone here is correct. It doesn't matter when or who pays off that last few thousand. Either way, the net winds up going towards your new ride. But with the used car market what it is right now, I would strongly suggest that you pay it off yourself and then list the car for private party sale. It is a bit more work, but the numbers I've seen out there for used metal are crazy! I sold my 2019 C43 AMG yesterday for $51k. I only paid $56k for it in late 2018. The dealer offered my $44k which was a very fair price, but I'd rather make that extra money myself and make my new G80 purchase even easier. At a minimum, run your current car through Driveway.com or Carvana to see what others are offering. Driveway is offering the best prices right now from what I can see.

I agree ^^^
If you think you can get more money selling privately and don't mind the extra work... knowing the current market for used car sales is better than the KBB fair price trade value plus the added tax differential ($40k) saving.
Using the above example, dealer would pay merlin $44 which say local tax is 8% which is about $3,500 in a sense he would have gotten $47,500 off his new M3 (assuming he does not own anything to the bank). He sold privately for $51k so he made $3,500 cash in his pocket if he would just traded it in.

For me, if the difference is not much, I would just trade it in, simple, no work. But if I know I can get thousands more, well, I would sell it privately, you need to do some math and forecast/prediction. Plus you need to consider, trade in is immediate and selling on your own may take weeks

[merlin3008]

Originally Posted by Mperor

I agree ^^^
If you think you can get more money selling privately and don't mind the extra work... knowing the current market for used car sales is better than the KBB fair price trade value plus the added tax differential ($40k) saving.
Using the above example, dealer would pay merlin $44 which say local tax is 8% which is about $3,500 in a sense he would have gotten $47,500 off his new M3 (assuming he does not own anything to the bank). He sold privately for $51k so he made $3,500 cash in his pocket if he would just traded it in.

For me, if the difference is not much, I would just trade it in, simple, no work. But if I know I can get thousands more, well, I would sell it privately, you need to do some math and forecast/prediction. Plus you need to consider, trade in is immediate and selling on your own may take weeks

Actually the tax incentives in Illinois aren't there. I think the amount of tax you can avoid by trading in is limited to $10,000 of vehicle value.

[FNIGUY16]

<- Dealer Finance director here. Have the dealer pay it off if you are trading it, its cleaner and easier. When you make the payment, unless its weeks in advance, it can take time for the bank to release the title, in some cases 3-4 weeks. If you have paid it off, the dealership is going to want the title and lean release. Letting them do that washes your hands of any later on paperwork you have to mess with.

On the trade value side of things, do you have a local carmax? They are giving stupid money on cars lately. They pay it off, also less paperwork hassle for you.
You can also use that as a negotiating tactic also.

[MachinesWithSouls]

Ever so slightly off topic, but the way the used car market is right now, have you considered putting the F80 up for auction?

I did this with my 335 while I wait for my G80, and was very happy with the result. You'd get a lot more than anything the dealer would offer you on a trade in.

I wrote about my experience here. I hope it helps!

https://machineswithsouls.com/2021/0...-of-cars-bids/

[Gfit]

Originally Posted by ROBERT1183

No difference on a finance. If it was a lease its cheaper for them to buy it out. If you were to buy it out you would have to pay the tax on the buyout since you didnt pay tax on that money. Before trading it into the dealer reach out to some wholesale dealers near you and see what they offer. I got $64.5k for my 18 M3 comp 6speed. It was coming off lease. Only 3700 miles on. Dealers were offering $57k on trade. It was worth way more so i didnt trade it in. Since i didnt pay the tax on the buyout it was equal to me selling it privately for $68k

Actually depends on the leasing company. For years the banks took the risk on residuals and when the market was soft we're taking hits. Then the market turned and people starting getting out early and the dealers and customers were reaping the gains. Many lenders now have a significantly higher dealer vs customer buyout. In my case, my buyout with tax is $47,000 on my Alfa QV. dealer buyout is $62,000. So I bought it myself and plan on selling to vroom or carvana for $56,000.

[rak299]

Don't pay it off if you are going to buy a car in the next couple of months. If you pay it off, there will be a delay for the title to be recorded and reissued without a lien

[ROBERT1183]

Originally Posted by Gfit

Actually depends on the leasing company. For years the banks took the risk on residuals and when the market was soft we're taking hits. Then the market turned and people starting getting out early and the dealers and customers were reaping the gains. Many lenders now have a significantly higher dealer vs customer buyout. In my case, my buyout with tax is $47,000 on my Alfa QV. dealer buyout is $62,000. So I bought it myself and plan on selling to vroom or carvana for $56,000.

Through BMW financial there was no difference on payout if I bought it out or a dealer bought out the car. The only difference was the tax.

[Likeanowl]

This is financed not leased. I’m in an odd spot because it’s my only car so I can’t sell/trade it until I have my new car yet I need the money from selling it to put towards the new one.

[SintAFM]

Originally Posted by Likeanowl

This is financed not leased. I’m in an odd spot because it’s my only car so I can’t sell/trade it until I have my new car yet I need the money from selling it to put towards the new one.

There's intangible benefits to trading it in. You'll lose money vs private sale but the dealer will do all of the paperwork and you can drive your F80 right up until the time you drive off with your new car.

If it's any added stress/hardship to private sale then just trade it in.

But that's my 2c

[LuvMyE92]

Originally Posted by Likeanowl

This is financed not leased. I’m in an odd spot because it’s my only car so I can’t sell/trade it until I have my new car yet I need the money from selling it to put towards the new one.

That does reduce your options.

Great advice in the posts above. To summarize (and I concur) let the dealer add the difference to your deal. Less hassle, same net result.

Oh - as mentioned above, you really should look into Carmax. If they offer you more than the dealer (include your sales tax savings, if any) then turn it into Carmax the day your car comes in. Get a friend or an Uber to take you between the dealerships. I've done it several times. Or, use the Carmax offer to stimulate the dealer to up their offer. They want nice used cars.