Nowadays, it is very common for someone to trade-in their car when they are already paying off the loan. However, when deciding when to do this, there are some important things you need to know. You need to ensure that the value of the car is very close to the market price. Before making any decisions regarding the trade-in value of your used car, you must first have knowledge of how the whole process works, so read on to find out more about this dilemma!
One important fact to keep in mind is the car dealership will need to value your vehicle at the level that they will still make money when they eventually sell it.
How does trade-in a car work?
When trading in your used car, you need to keep in mind that trade-ins don’t usually happen instantly or easily. They require certain steps and procedures to be a success. You also need to consider that trade-ins are mostly sold through used car dealerships, which means that the value of your used car is more likely to be low compared to selling it on your own in the market. You need to follow the following steps and procedures when selling your used car in exchange for a new four-wheeler.
#1 Know the value of your used car
It is very important to know the trade-in value. This is because this amount will help you determine whether your asking price will be accepted by the dealership where you plan on buying a new car. You can find the value of your car here.
#2. Have a copy of your loan statement
You also need to have a copy of your auto loan statement with you when going to sell your used car if you still have an outstanding motor loan against it. This is necessary because dealerships may ask for proof of the amount you owe the bank. Since trade-ins can happen fast, it may be a hassle for you to bring the original auto loan statement with you when the day comes. That is why having a copy of your auto loan statement would be very helpful.
#3. Know the value of a new car
When selling your used car through trade-in, you need to know the cost of a brand new one. The brand-new car gives a basis, for depreciating it over the years to come up with an estimated value of the used car. This is because the value of your car will serve as an indicator of whether dealerships have an interest in your trade-in vehicle. You also wouldn’t want to be ripped off through undervaluation.
#4 Get the offer price from used car dealers?
Once you have followed the steps above, it will be time to get the values from used auto dealers. Make sure to get these offers from several dealers in order to get the best deal. Again, make sure you have an idea of how much your car would fetch in the market in a quick sale situation.
#5 Close the deal
When the day comes, make sure that you already have a trade-in price for your used car. If the value of is acceptable to the dealer, then you can proceed to sell your used car and trade it in for a new four-wheeler from the same dealership.
How can you have trade-in a car with negative equity?
Let’s say that you trade-in your used car, but the value does not cover what you owe on the vehicle. This trade-in scenario would be considered negative equity. This can be very frustrating since you will still end up having to add money to cover the negative equity. You can also choose to continue repaying the motor until the negative equity is extinguished. The other option is to negotiate with the bank to roll over the negative equity into the new motor loans.
Can I trade in my car if it’s not paid off?
There is a possibility that you can trade-in your auto loan when your vehicle is still owned and fully financed by the dealership. This means that you do not have to pay anything for this type of trade-in arrangement, but the downside would be the fact that you will get a lower valuation for the car. Or much less than what you owe on your loan for your current car. You also need to consider whether such trade-ins are worth it for you, since they may cost more money.
Should I sell or trade-in my car?
Selling your old car through trade-ins is usually the most practical and beneficial option compared to selling it on your own. However, it still require you to have a little knowledge about auto trade-in valuation and conditions so that you can at least get a fair deal. You also need to be very careful with trade-ins since they may just cost more. If you are not in a hurry, then just for selling the car.
Car sale through private treaty
The value you get from auto dealers for trade-in is usually lower than the market price. This is because they normally factor in the fact that it will take some time before they sell your car. Selling through private treaty can fetch you more money
Pros of trade-ins
– It saves you the amount of down payment required to get a new auto.
– Saves time and money for car sellers
-You will not need to start repairing your auto. The used car dealer will value the vehicle in its current state.
Cons of trade-in:
– It requires knowledge and proper preparation on car valuation and conditions
– May cause negative equity which can lead to having to pay more money, instead of getting cash back for your used auto.
-Valuation is lower than what you get when you sell under private treaty.
-Process takes some time and you must be prepared to wait.
– You need to also be aware of the fact that there are certain risks involved when trading vehicles with existing loans.
You can also read about Consumer loans
Takeaways
When trade-in time comes, make sure that you already have a market price for your used car. If the value of your used car is acceptable to the dealer, then you can proceed to trade it in for a new car from the same dealership.
Selling your old car through trade-ins is usually the most practical and beneficial option compared to selling it on your own. You quickly drive out with a new car.
The value you get from trade-in is normally lower than the market price since dealers factor in resale time, which means it could take some time before they find a buyer for your trade-in.
Thank you for reading and let us know what you think about the trade-in.
