An over trade help car buyers tide over the large sum of downpayment as stipulated by the latest loan curb.
For example, a buyer of a $100,000 new car will need to put down at least $40,000 as downpayment. In overtrade, the seller will rise the car price to $110,000, and at the same time giving $10,000 more than what the trade-in car is worth.
Even though the buyer now needs to pay $44,000 for his downpayment, he will receive an additional $10,000 more for his trade in. Effectively, he only needs to fork out $34,000 for his initial payment.