How do trade-ins work while money is still owed on a car?

(My Original Blog Post: http://www.latesttrendsguide.com/?p=1275)

I owe about $38k more on my car, the trade-in value is around $35k. I'd like to trade it in for a car at the dealership marked at around $25-33k~ to lower my monthly payments.

Is this feasible?

How does this work?

Would it be wiser to sell the car to a private party and buyout the loan with another private party's loan?

By: urbaninja54