Cash Rebates For New Cars Can Be Used On Old Loan

Owe more on your old car than it’s worth, but want to buy a new one? Those cash rebates so many car companies are offering on new purchase can be used to pay off your old loan. [Bankrate] (Photo: morsteen)


Edit Your Comment

  1. SpdRacer says:

    Um, duh!

  2. tbonekatz says:

    I did this in 2005 when I traded my piece of crap Cadillac for my piece of crap Explorer. Not a new thing.

    • Brawndo_The_Thirst_Mutliator says:

      @tbonekatz: So you traded in 1 piece of crap for another? I am curious. What was the thought process there? You liked the new crap smell?
      If you are upside down on a loan, and you need a new car (notice I said need), then I could understand this. But assuming you used the rebate to pay off the old loan, then you came out not as bad off as possible. If you used the rebate, traded in your car, and still didn’t have the first loan paid off…well…welcome to Consumerist. There’s a lot of help here for you.

  3. captadam says:

    My credit union (PSECU) will finance up to 130% of the KBB value of a used car–I’m not sure how they handle going over the MSPR of a new car, but I think they will do it–as long as you accept adding an additional percentage point to the loan’s APR. I, personally, would avoid taking on such a loan, but I believe they do this specifically so that you can pay off a car that’s under water. But their rates are already low (I just financed a used Civic for 60 months for 4.99% APR, an amount that made the sleazy salesman’s eyes pop out–he didn’t even try to sell me on the financing deals that would get him a kickback), so this deal isn’t as bad as it might at first seem.

  4. captadam says:

    MSPR, MSRP, whatever …

  5. techstar25 says:

    However, if you use that rebate to pay off your old loan, it means you’ll be taking on a new loan most likely with no down payment. So there you’ll be, driving off the lot, and your new car depreciates by $3000, and you’re upside down again.

    • Farquar says:


      Right. It’s stupid. So, congrats. You aren’t upside down on your 2005 Civic anymore. Woo! Now you are upside down on your 2009 Toyota Camry. Hooray!

    • ZukeZuke says:

      @techstar25: Welcome to America, where everything is debt-financed, above and beyond…

      How do you think we got into this economic flustercuck to begin with?

  6. Dimitri Teresh says:

    That’s one thing you could do. Alternative, you could just buy rims.

  7. SkokieGuy says:

    Cash rebates can also be used to buy food, gasoline and many other types of goods and services.

  8. RenRen says:

    Upside down, inside out… You still need a vehicle to get around. I’ve come to see my car payments as one of those things I just have to pay. And the $100 or so in insurance (which covers mechanical repairs as well) make sure that this investment doesn’t go down the creek without a paddle… (Yes, I have GAP coverage as well.)

  9. billbillbillbill says:

    Just bought an SUV this weekend for CASH!!! It felt so good, never had a car payment before, hopefully never will!

  10. TEW says:

    This is just another way for the dealers to make you spend your hard earned money. Pay off the car and drive it until it falls completely apart. Look like a loser driving a beater and grow your personal wealth. I have learned to love the world of driving the beater and have not spent more than $3,000 to get the cars completely perfect.

  11. Verucalise (Est.February2008) says:

    Unfortunately, some people are upside on their loans and got caught with a horrible APR. (Myself included) And even more unfortunate, they are caught with a dilemma. I needed a minivan, and was upside down on my loan with my saturn vue. (140K miles on it, with a 19.96% interest rate!) So I used these incentives to cancel out my negative equity, invest in a brand new vehicle with a warranty and get a much better interest rate. (8.5%)

    In the end- I still financed less than the MSRP of the vehicle by $2K, and my payments are slightly higher but I have a more reliable vehicle. I throw as much money at the principal as I can, and I’ve already paid down $1K in a couple months.

    So for some people driving around in a money pit kind of car, that they can’t refi – this is actually a better option. According to my amortization schedule, I’m set to pay this puppy off a year ahead of time. That’s only 1 year longer than I had left on my Saturn.

    So it’s completely do-able for some people.

  12. INsano says:

    Cash? Used as legal tender for all debts public and private? Really?

  13. sburnap42 says:

    Or you could just realize that replacing your car every 3-4 years is a waste of money

  14. tbonekatz says:

    @Dimitri Teresh:

    Better yet, rent to own rims!

  15. econobiker says:

    Dimitri Teresh 3:14 PM That’s one thing you could do. Alternative, you could just buy rims.

    Oh come on Dimitri, you know you should only Rent-To-Own rims and tires now a days…

  16. Jesse says:

    Some people are morons when it comes to buying cars. My best friend yesterday was sitting there trying to tell me its a better deal to buy new because of the better financing.

    That is true but the interest savings still won’t make up for the huge depreciation hit that the vehicle takes in the first few months after its driven off the lot.

    • Verucalise (Est.February2008) says:

      @Jesse: I’d rather drive around a brand new vehicle thats worth $5K less than I owe on it VS a 7 year old vehicle with 140K miles on it, worth $7K less than I owe on it.

      It’s a way to get out of a shitty loan while helping yourself. The only reason you really shouldn’t do this if it doesn’t help your financial situation- the APR doesn’t decrease substantially, and the loan agreement goes another 6 years or whatever.

      Because I negotiated a better interest rate, I took out a 5 year loan and if I keep putting $75 a month extra on the vehicle, I pay it off in 4. That’s just 1 more year than I had left on my other loan.

      My child has medical issues so unfortunately, I rack up a lot of miles on my vehicle driving to Albany Medical and back for appts. If I had kept my Saturn for another 3 years and paid it off, I would of spent $9K and had a vehicle with over 200,000 miles.