The last option for selling a car that isn’t paid off yet would be to trade in your car for a new car…

A trade in will be your easiest option since the car dealer will handle all of the paperwork and there will be lots of new car incentives if the economy is sucking.

The downside to trading in your car for a new one…

• You will be starting the cycle of consumer debt all over again, which is what got you into this mess in the first place.

• You will get far less for your car than what its worth because the dealer will have to make money on the trade in. And by the way; car dealers make MORE money on used cars than they do on new cars. Yup, that is a fact.

• The other downside is that you will be opening yourself up to a lot of tricks that are standard operating procedure for many car dealers. Tricks like: Charging you more for the new car than it is worth. Tacking points on to the car loan. Charging you a really high rate of interest since the dealer will know you are in a desperate position.

To avoid ever being upside down again on a car loan…

• Drop at least 20% down whenever you buy a car.

• Keep your old car for at least a year after you have paid it off. After paying it off, take the amount you were paying monthly and deposit it into a savings account each month. Call it your “Down Payment Savings Account.”

• Get a shorter car loan the next time. Don’t finance a car for any more than five years. Four years would be better though.

• Limit your payments. Your car payment shouldn’t be more than 20% of your take home pay. If you have a lot of credit card debt, keep the payment to 15% or less, or better yet, don’t buy a new car and continue driving your old car!

There are pitfalls involved in selling a car that isn’t paid off yet, but hopefully this has give you some insight into how you can do it without destroying your credit or bank account.

Click here for Part 1 of Selling A Car That Isn’t Paid Off Yet >>