Can You Trade in a Financed Car to Reduce Your Loan Balance?
You can trade in your old, previously paid for, car to get cash for your next trade-in. It takes some time to find a new buyer, but the process is very simple. All you need is a clean, current car that has no significant mechanical problems. You will get cash for your trade-in, and if you enjoy, you can even put all of it towards your next loan. There are also special programs for underwater drivers who are delinquent on their auto loan.
To find a buyer for your old car, visit a local dealership. Ask the salesperson what kind of incentives they have available. Incentives can be anything from having extra security on the car to other types of “points”. If you take advantage of any available incentives, you can lower your monthly payment or even get a smaller loan balance. This makes it easier to pay off your new loan, which will reduce the amount of stress and worry you feel about your new loan.
After you find a dealership, tell them everything you can about your old vehicle. Describe the mileage you are driving each month, including the city and suburbs, the year of your last purchase, etc. They will want to know as much about your vehicle as possible before considering you for trading. Tell them if you have had any major mechanical repairs, any problems with your transmission, etc. You can also include documents related to your home and current mortgage.
If you want to trade in a financed car, the first step is to contact your lender. Explain your circumstances – how much money do you owe on your vehicle and what would make a good trade-in offer? Lenders may offer incentives for having a low balance on a vehicle – many of them will even match or beat the value of your vehicle if you have enough equity built up. If this is not an option for you, simply discuss the possibility of paying off your debt by transferring your loan from your old card to your new one.
Once you have discussed the possibility of trading in your vehicle, you should ask your current lender about the process. They should be able to provide you with all the details and information on how does trading in a financed car work. This includes how much of a difference your remaining balance makes to your overall monthly payment. Find out exactly how much you will be saving by trading in – will it be enough to pay off your debt?
When you start talking to your lender about how does trading in a financed car work, remember that you should not expect the amount of money you save to entirely cover your loan balance. You still will need to find the extra cash needed to pay off your other bills and debts. If you have good credit, you may also be eligible for additional savings based upon the trade-in value of your vehicle. If you are not good credit, you may be offered a lower interest rate or waived down payments and fees.
You should also be aware that even though you may have paid off your debt, you could incur new debt once you trade your vehicle in. This is why it is important to know exactly what your trade-in value is. Many dealers may tell you that you have negative equity and will be charged fees for carrying a higher loan balance. In reality, most dealers do not make you pay any interest or fees on a negative equity car. If you do not have a negative equity car, your dealer will require you to have a trade-in but this will likely be at a significantly lower price than your old loan balance.
There is still hope if your vehicle has a positive equity balance. If you are able to obtain the right amount of savings, you may be able to trade your car and still owe less money on your new loan. If you are able to secure a better price than your trade-in value, your new dealer will be more than happy to work with you. It just takes a little extra time and effort to determine whether or not you can successfully trade your car into cash.