I get a question quite frequently, “Can I trade in my vehicle if I still owe on it?”
COVID-19 has made the pre-owned car market crazy! It is hard to find a good used car at the moment, which has driven the value up on the vehicle that you are driving now. You may have been thinking of getting a newer model, or just something different, and are wondering, “What if I still owe on my vehicle?”
The answer is :
-Yes, yes you can trade!
There are 2 ways it can go…
If the amount left owed on your vehicle is less than your trade in value, that’s great! It makes it easy!
That is called “Positive Equity”
Example: If you owe $2000 left on your loan but the value of your trade in is $4000, the dealership pays the remainder of the loan, then applies $2000 as a down payment to your new ride! ( Or, you could possibly get a check back for the remainder rather than applying it to the new loan)
Now, if the amount that is left owed is greater than the trade in value, it still may be possible, as long as you deal with a true professional.
This is called “Negative Equity”
Example: If you owe $4000 left on your loan but the value of your trade in is $2000, the dealership will have to pay the loan completely off. So in that instance, you would need to pay the $2000 yourself or you will be adding the other $2000 to the new loan. This is where it can get a little tricky and why I advise that you deal with a real professional. Depending on your credit situation, and/or amount of negative equity, sometimes “rolling over money” on a new loan may not be possible. Or even if your credit is perfect, you may still not like the idea of rolling money over to a new one. In that case, you may need a new vehicle that has a rebate, or possibly a preowned that has a really good book value based on what the dealership is selling it for. When dealing with this it is very important to have the deal “structured” right in the beginning.
It is always good to know the value of your trade when thinking of getting a new vehicle and you can find out by sending me the pics and info on it!
