How Does a Car Trade-in Work?
When it comes time to look for a new vehicle, you’ll first have to decide what to do with your used one. You can either sell it yourself or you can trade it into a dealership.
You may be wondering how a car trade-in works. This process is when your vehicle gets appraised and is given a value. You can then use that amount to put towards the purchase of a new car, which can help lower your monthly payments.
However, there are several things to keep in mind when trading in a car. You’ll want to know how a car’s worth is determined and how equity can affect the overall trade-in process.
Read through this informative guide, then contact us at FreeVehicleValues.com when you’re ready to trade in your pre-owned automobile.
What Is My Car Worth?
Before you exchange your used car for a new one, it’s important to understand what a car’s trade-in value is.
An appraiser does an evaluation of your automobile, and then gives you a value based on several factors. These include:
- Model year
- Vehicle condition
However, it also includes other factors, such as the time of year and your location. For instance, you’d have a better chance of selling your convertible in a coastal town in the summer than you would in the winter in a town with harsher climates.
It’s important to keep these things in mind when it comes time to trade in your car. When all the right factors are in place, you can get a high value for your automobile.
How Much Do I Still Owe on My Car?
After determining how much your car is worth, you’ll need to compare that to how much you still owe on it. This will come into play when it comes time to trade it in.
A big thing to keep in mind for this step is equity, which is the difference between how much your vehicle is worth and the amount that you still owe on it. If the trade-in value is more than what you owe on the car, then you have positive equity.
Meanwhile, if the trade-in value is less than what you owe, then you have negative equity or are upside down on your car loan. This could happen for different reasons, such as a change or loss in work, rolling over a previous loan, etc.
Either way, you’ll need to know what type of equity you have to decide which steps to take next.
How to Trade in My Car
If you have negative equity, there are several options you can take. You can postpone a new car purchase until you’ve gained positive equity. During that time, you can pay your current loan off faster by making additional, principal-only payments.
Also, you can go ahead and do the trade-in with having negative equity. You can find a dealer that offers incentives large enough to cover your outstanding balance.
Another option is to refinance your car loan, which means you’ll use the new loan to pay off the old one. However, you may have to pay more interest over time. Therefore, you might want to avoid a rollover situation by paying off the used car’s balance yourself ahead of time.
Take the Next Steps to Trade in Your Vehicle Today!
If you have any questions about trading in your car, contact us at FreeVehicleValues.com. You can also find out how much your vehicle is worth by entering its VIN (Vehicle Identification Number) into our system. Then, you can get the money you need to drive home in the car of your dreams.