Most people know that when you trade in your financed vehicle, you’ll have to pay off the loan with the dealership before you can drive away in your new car. However, many people don’t realize just how much money they’ll have to pay on top of that loan payoff. So before you sell your car and buy another, you should know a few things before trading in your financed vehicle.
Know What You Owe
When selling a car with negative equity, two main factors are what your car is worth and how much you owe it. Whether or not you owe more than it’s worth, you may have to pay off some of what’s left before selling. It also depends on where you live—different states have different regulations around financing a car. Because of these differences, Lantern Credit recommends talking to an auto loan consultant or dealership sales manager.
Find Out if You Can Transfer the Loan
Many dealers will try to trade in a financed car when you owe money. However, it might be best to wait until you’re debt-free before shopping for a new car. This is especially true if your current lender doesn’t want to transfer over your existing loan. You should also talk with your lender about transferring over any remaining balance and ask how many payments you have left on the loan.
Refinancing Your Auto Loan
Refinancing an auto loan with a different lender is not as straightforward as refinancing other types of loans because of special considerations for consumers who want to refinance their auto loans. According to Lantern Credit by SoFi, “The new lender will likely need details about your vehicle, including the make, model, and year.” But if you prefer simplicity, choosing to refinance an auto loan with the same lender is a better option.
Take Advantage of Manufacturer Rebates
Manufacturer rebates can be a great tool if you’re looking to save some money on a car purchase. However, there are a few things to consider regarding manufacturer rebates. First, you may be trying to save money on a new car and don’t want to spend extra cash on top of what you owe. Then you must take advantage of manufacturer rebates when looking for a good deal.
Consider Selling Privately
Selling a car still in your name can feel daunting. Fortunately, there are some steps you can take to get ready for a sale and help make sure it goes smoothly. For example, if you’re trying to sell a car with debt remaining on it — or if you have negative equity — one of your first steps is to contact your lender to let them know what’s happening.
Whether you decide to sell your car privately or trade it in at a dealership, several factors can affect how much money you receive for your vehicle. For example, before you trade in your car, it’s important to understand your options.