can i trade in a financed car : Trading in a financed car is very common in the United States for people looking to upgrade their rides. Know what you should know when trading in your vehicle from considerations to steps that will help you through the process
Knowing Your Loan and Equity
1) Loan Balance : Prior to even starting the trade-in process, understand what your current loan balance is .You will need to call the lender directly for the payoff amount. This is nothing more than the principle amount outstanding, in addition to interest, fees, and other moneys due.
2) Equity Status : Determine if you have either positive or negative equity in your vehicle.
3) Positive Equity : This is when the trade in value is more than what is still owed on the previous car. This is the good situation; the overage in value will be considered a down payment for your new vehicle.
4)Negative Equity (Upside-Down): When you owe more on the loan than the car’s current value. This complicates trading in your car and makes it costlier.
How to Trade In a Financed Car | can i trade in a financed car
- Get Your Car Appraised : Take your car to different dealerships to have it appaised or check online at sites like Kelley Blue Book and Edmunds, which will give you an approximate value for your car. This gives you a guideline price from which you can work out your negotiations.
- Shop Around : Go around various other dealerships to compare and assess their trade-in offers. Other dealerships might want to pay more for your vehicle than others.
- Negotiating the Trade-In Price : Once you have settled on a dealer, negotiate how much he will give you for your car. Knowing what the market value is will get you a fair price.
- Loan Balance Negotiations
- Positive Equity : Will pay the balance of your current loan with the value, and what remains after paying off your loan is a down payment toward the purchase of your new vehicle.
- Negative Equity :
- In the case of negative equity, following two options are for you Pay out of pocket the difference between what’s still owed on the loan and what value the car carries at trade-in.
- You can roll over the negative equity into your new car loan. This will increase what you have to borrow — and may make your monthly payments higher than they were.
5) Complete the Trade-In : can i trade in a financed car The moment you finally work out a loan balance and, in turn, you agree on some value for trade-in, you will sign all documents necessary to complete the sale. The dealer will be able to arrange for the payoff of your existing loan, change of ownership, and related details.
Can i trade in a financed car Things to Consider
- Credit Score Impact : In case you are trading in a financed car and then making an application for another loan, they’d require your credit score. That means you should check your credit standing and work on it if necessary so you end up with the best possible deal.
- Loan Tenor : Clearly state the terms of your new loan, more so if you are rolling over negative equity. Long tenors of loans may further reduce the burden on your monthly payments but increase the absolute interest paid.
- Loan Tenor : Clearly state the terms of your new loan, more so if you are rolling over negative equity. Long tenors of loans may further reduce the burden on your monthly payments but increase the absolute interest paid.
- Timing : The sooner you trade in your car, the lower is its devaluation; however, take into consideration the time when the loan balance is lower and the market value is higher.
- Documentation : Be ready to bring with you all papers regarding your current loan agreement, registration of the vehicle, and proof of insurance.