Well I am sure that if you have traded in a vehicle that had an outstanding loan on it you have probably heard that line before...
"If you buy today we will take care of those last 3, 4, or 5 payments". (What ever the number of payments it doesn't matter)
Many people are fooled by this... The truth of the matter is that you are paying for those payments and in fact that are costing you a lot more than of you had just waited or if you had paid off the rest of your payments with cash.
Let me give you an example.
You have test drove the vehicle that you think you want to own, you are in negotiations with the sales person and you tell them that you have 7 remaining payments of $450. So after you have laid out all of your demands the sales person retires to that mangers office while you sit there drinking your coffee waiting for them to return, all the while you are preparing yourself to turn down his offer because you know its going to be high... A few minutes later your sales person comes back to you and says... "how does a payment of $460 a month and we will make those remaining payments go away for you... so you wont have to pay them?" At this point you are probably giggling inside, not only are you going to get the brand new vehicle that you want but the dealership says it will take care of your remaining payments and to top it all off its only going to cost you $10 more per month to do this... You are thinking that you would be crazy to turn down such a fantastic deal. But because you are a smart shopper you counter... You want them to match your current payments... The dealership counters your offer by saying "what if we split the difference?" Now remember at this point you were already excited over the deal... you have counter because everyone always says that you should never take the first offer. Then the come back and meet you in the middle... Why the hell not. You have successfully renegotiated and it only costs you 5 bucks more per month...
WHAT A FANTASTIC DEAL!!!! NOT necessarily.
Think about it... When was the last time a dealership just offered to take $3150 (7 x 450= 3150) of their selling price? Check out this
post where I discuss discounts.
99% the dealership has added the $3150 to your selling price and extending the term of your new agreement. Not only will you be paying for that $3150 for another 3-5 years (depending on the term of the new agreement) but you will be paying interest on that money and thus costing you a lot more than the original $3150.
Just understand that the dealership is not just making those payments go away, YOU are still paying them. If you waited until you had completed your term your payments would be lower. Keeping the general rule of $15-$25 per thousand could have saved up to $75 per month or kept the payments at 450-460/month and shortened them term and by doing so saved yourself a bundle on interest.
The decision is up to you. Maybe you really need to get into that vehicle for real reasons and not just on a whim.
In truth its only a Bad deal if you think so.
Do you have a question that you would like to know that answer to? 
