I am in the process of purchasing a vehicle. However I have a trade in, I owe about 5K on it. The trade in value is about half of that, how does this work? Is the difference added on to the purchase price or is the pay off added to the purchase price. Please help!! :confused:

Have you tried selling the current vehicle to a private party and using that as a down payment for the car that you plan to purchase? You can usually get more money for the current vehicle this way. Make sure to look up the Kelley Blue Book value of the vehicle. New Car Prices, Used Car Prices, Blue Book Value, Car Reviews - Official Kelley Blue Book Site (http://www.kbb.com). craigslist classifieds: jobs, housing, personals, for sale, services, community, events, forums (http://www.craigslist.com) is a great place to sell your vehicle.

It will depend, IF the new dealer will even accept it, yes, they merely charge you too much for the car you are buying so that it is added in to the new cost of the car

For example if you have a car worth 2500 and owe 5000.
So if I went in to buy the new car I would get it for maybe 20,000 if I paid cash for it, you will be paying 23000 or maybe even 25000 to finance plus interest.
So in a few years you will be in the same mess owing more than it is still worth.