To Trade or Not to Trade...HELP!

I have a 2004 GMC Yukon XL with 119K miles on it. While I currently owe 18K on it, the most a dealer will give me appears to be around 10-12K. Needless to say, at best… I’m upside down by 6K. My wife wants to downsize to a smaller vehicle, but would like something new (or newer). The fact is, the Yukon is nice, but the cost of gas for the amount of driving we do is insane.

We are trying to decide if trading it is even worth it, or if the cost of gas outweighs the cost of a new gigantic loan. Now, before I get into what we are thinking of doing, please do keep in mind that we are looking at this next vehicle as the vehicle we keep until it is paid off, and beyond. With that said, we really like the 2012 Volkswagen Tiguan SE, but the cost is $32K.

So the question is, if the dealer will only give me 12K for the Yukon, I’ll still owe 6K…so I’m looking at a loan of 38K; correct? Seems like a bad idea just typing it haha, but I do have 5k for a down payment.

What do you all think? Should I just keep the Yukon and apply the 5K to pay it down, should I attempt to sell the car myself for the 14K that Auto Trader states I could sell it for, or should I go for it and upgrade to a car we will keep long term? To that note, if anyone has any input on the Tiguan SE, please let me know…and if you have another vehicle you’d suggest instead, I’m all ears.

Thanks for your time and input!


To save a few hundred dollars a year on gas you are looking at going into more debt? You have got to get out of the current financial hole, not dig a bigger one. Consider buying a used ($2,000-3K) older small economy car. Use the big Yukon only when necessary until it is paid off or until you are no longer upside down on it.

You aren’t in a good situation to consider buying a new $30K car at this time.

Thanks for the straight forward feedback! Much appreciated.

I’m actually spending $300+ a month alone on gas with the Yukon. I think I’ll just sell it myself for the 12-14K, then pay the rest of it off with cash. At that point I’ll look at getting a newer vehicle that makes more sense.

Just for future reference though, if you are upside-down on a vehicle and trade it in, does it work like this:

$30K (new car) - 10K (trade in) + 8K (amount you still owe) - 5K (down payment) = 23K (new loan)

Thanks again!


Put the Yukon up for sale, but don’t get another car until it is sold. Perhaps you can get $14K but you’ll have to see what buyers are out there and what they will pay. The new car will use gas too. If the mpg is twice as good as the Yukon, then you’ll be saving $150 a month on gas.

$1,800 saved per year on gas is good, but at what other costs? Interest on a big car loan has to be considered one of the costs. You might consider a lease to keep the payments low and drive the next car for the 2 or 3 years term of the lease. In that time you can save more for a down payment, or perhaps have enough money to buy the car at the end of lease period. The goal could be to be able to buy a car with cash 3 years from now.

A high monthly payment on a car can wreak havoc on your lifestyle. The car depreciates, so your money is essentially gone. A house payment goes into something that doesn’t depreciate. The high monthly car payment makes putting money away for retirement or college that much harder.

Your formula for making a trade does work. Banks and car dealers are more than happy to make these deals and they benefit by moving cars and collecting fees and interest. Question is; does the buyer benefit from the deal?

Uncle is right is absolutely right. Buying a car based upon taking out loans is a way to get behind on your overall finances real quick… Sell the car if you must, and buy a used economy car. Get right side up by saving for the car you want so the loan is little or none. If you do this now, you can have cars of your dreams in the future, pay cash and the savings you make in interest on the loans can go somewhere that’s worthwhile.

BTW, money spent on any car is probably the worse necessary “investment” you will ever make. You want to buy vehicles that fill your needs, not your dreams. Save that type of buying when when you can pay cash.
To get a little sober, in the years I have watched the passing of many friends and aquaintences, I can’t remember ANY lamenting about the cars they owned or wanted, during their final days. People waste presious time and resources building memories.

My suggestion is to keep the vehicle you now have and pay down the loan as quickly as possible. By paying ahead, you will reduce the interest on the loan. Make certain that there is no penalty for paying ahead on the loan. I do admit to having a bias against lending institutions. I have only borrowed money to purchase a home, but I often made double payments just to get out from under the mortgage.

I agree with the others that you do not even need to consider a trade at this point; in spite of all of those bogus “Are you upside down on your car? Get right side up by piling on more debt!” TV commercials.

Personally, I think you’re more than 6 grand upside down on this vehicle. The dealer offered you 10-12 trade-in is the way I read it. That does not mean the vehicle is worth that much or that it will sell for anywhere near that. That would be part of the smoke and mirrors number juggling game.
A look at some completed eBay auctions for similar '04 Yukons showed some selling for 6 to 8 and only a few even approaching or meeting 10 grand. With the right buyer at the right time, maybe you’ll get lucky to some degree.

You should pay down on the loan. When you owe what the vehicle is worth then consider trading it. I’ve had friends who have traded vehicles in and got upside down on their loans and that is a type of stress you don’t need to deal with especially in this economy.

Many thanks for the advice all! You’ve helped to set me straight. I’ll will work to pay down the vehicle I have, and then save up before buying a newer vehicle. Thanks again!

Your equation is wrong! You wrote:

$30K (new car) - 10K (trade in) + 8K (amount you still owe) - 5K (down payment) = 23K (new loan)

It should be:

$30K (new car) - 10K (trade in) + 18K (TOTAL amount you still owe) - 5K (down payment) = 33K (new loan)

And $33k is more than the cost of the new car, and you will likely not be able to get a loan for that amount.

Buy a beater that runs good & gets decent mileage but may not look so good. Put liability insurance only on it which should save you $$ also! Sell off the Yukon and use the money you save to pay off the loan. Once your “back on your feet again” you can reconsider buying a nicer car.

A new car is a luxury for someone in a good financial position. I’m afraid you’re not in that position. If you do buy anything, it should be a basic car that’s at least a few years old.

Keep in mind, too, that the Tiguan isn’t gonna get much better MPG than the Yukon(13/17 vs 22/27). Because the VW has a turbo on it, you’ll need to run premium fuel(usually 20 cents more than 87) AND synthetic oil(can cost double or more per change AND change more often, too)

plus, VW isn’t known for stellar reliability, so it could wind up in the shop more often than your Yukon has been