Do you need a change of scenery in your Harlingen garage? Trading in your current ride for a new vehicle is a great option when you want to elevate your San Benito drives, and it allows you to save money on your purchase. The trade-in process is pretty clear and straightforward when the previous auto loan is completely paid off. However, you can still trade in a car that is not paid off yet, believe it or not.
Want to know how to trade in a car that is not paid off? Discover more details with this handy guide from the finance team at Tipton Ford Brownsville. We’ll show you how to trade in a car you still owe on, whether you’re shopping for a new or used vehicle from our Brownsville dealership.
To see how to trade in a car that is not paid off, you need to determine if you have positive or negative equity. See which one situation applies to you when you figure out how to trade in a car you still owe on:
To calculate which type of equity you have, determine the outstanding balance of your vehicle loan. You can log into your lender’s system to find this out. Then, discover how much the car is worth according to Kelley Blue Book® values for your trade-in as a baseline for how much you might get from a dealership when trading in your vehicle for a newer one. Finally, figure out how much you stand to get from trade-in offers you receive from Weslaco-area dealerships.
If the trade-in offer is less than the amount you owe on the loan, then you’ve got negative equity. However, if the offer is more than what you still owe on the loan, then it is positive equity and you have some room to bargain.
Positive equity puts you in the most ideal position. The trade-in process will still be fairly easy because you’ve got some cash to play with. You will be able to trade in your current San Benito vehicle without owing any amount on the previous vehicle. Even better, you can put some cash towards your next vehicle as a down payment!
However, if you have negative equity, you will need to consider your options ahead of trading in a vehicle. It may take some maneuvering, but you can still trade in a vehicle for which you still owe money on a loan.
If you have negative equity, find out how to trade in a car you still owe on. There are a couple of options available.
The first option is the one you should consider because it can easily turn your situation for the better. You’ll need to have enough spare cash to do this. It will work in your favor if you do, and you’ll owe less debt in the long run. You might even improve your credit score and get lower interest rates moving forward by paying more principal on your current auto loan.
Many people choose this option when they have negative equity when determining how to trade in a car that is not paid off. However, you need to be careful. Transferring the amount to your new loan can increase the monthly payment and/or the interest and debt you owe. You might have more debt on your hands, which could negatively affect your credit. And, you’ll still be paying for a car that you traded in and don’t own anymore. The updated loan agreement will mean you owe more than what the newer vehicle is worth. The positive side is that your new car is less expensive than the one you just had a loan on because of the trade-in. If you can’t keep up with your current car payments and you are downsizing with a cheaper car, this could be the best option for you.
No matter which option you end up going with, our team recommends reading the auto loan contract carefully before signing it. There may be stipulations you’re not familiar with. And you’ll need to know how much the loan payments will be.
Still have questions about how to trade in a car that is not paid off? Contact us or call 956-594-6478. If you just want a new-to-you vehicle, it might be better to wait until you pay your current car off completely. But we’ll discuss which situation works for you as you shop for your next vehicle.
