Can U Trade in a Car that’s on Finance?
So you are in a situation where you would want to change to a new car but you are still actively paying, Can U Trade in a Car that’s on Finance? The bright side is even if you have an existing car loan, you can still trade in the vehicle, not that there won’t be a few more hurdles to cross before you can purchase a new car.
Getting a new car means that you will have to buy the car loaned out too. The bottom line is that the outstanding amount of the existing vehicle loan should be written off in one way or another. The interesting part though comes with looking at the angles and figuring out the win-win point.
What is the procedure for exchanging a vehicle that is still under finance?
There are a few different approaches you can take if you are looking to trade in a financed vehicle. The best option will depend on the specific details about your current loan and the value of your vehicle as a trade-in.
Car financed through a dealership
It may be possible to apply the remaining balance of your current auto loan to the balance of the loan for your new car. The trade-in value of the new vehicle can most often be rolled over to the subsequent care finance. In certain scenarios, the trade-in value may even suffice to pay off the loan entirely.
Loan secured by the vehicle
If you are considering trading in your current car, you may use the funds from the trade to pay down or satisfy your existing car loan. In some cases, you will have to pay additional charges for pre-payments or closure. So always read the fine print regarding your car loan before making a decision.
In case the car loan is unsecured in the Western Suburbs of Chicago, the lender may allow you to roll over the older loan even after you have traded off the vehicle. The flip side of this is that you will have two loans going, one for the car that you have traded in and one for the new car.
For a car secured by a loan, most lending institutions will want the full payment of the debt before they will allow a release on the vehicle. You cannot trade in your car when the lender is holding a security interest on it.
Car trade-in process with a loan in a nutshell
This is how it is structured in practice if you want to trade in a car under finance:
Stage 1: Determine the value of your vehicle as a trade-in. Check and find out how many similar make and models of vehicles exist in sales. Also, request a trade-in estimate from the lender.
Stage 2: Locate an appropriate vehicle within your price range. You can use a center for car repayment calculators to assist you in establishing a price range.
Stage 3: Gather all essential papers and take them to the car dealer. Also provide information on the current loan including loan account number, balance owing, and so forth.
Stage 4: As the owner of the vehicle that you would like to trade, determine whether the trade-in value is sufficient to pay off the loan that is still outstanding. In certain dealerships, they may opt to clear the outstanding amount by speaking to the loan provider directly and processing all documents required for the transfer of ownership.
Stage 5: Search for the most suitable car loan for the new vehicle you have just purchased. Consider your loan alternatives and choose one that meets your requirements. When all that is done you can proceed to complete your car purchase!
Some steps may differ depending on your situation. Lenders and dealers should be contacted in order to determine the most appropriate course of action.
Tips on How to Trade in a Car that Is Still Under Finance
As there are ways you can ease the agony of the trade-in process, there are also pieces of advice that one can follow which then helps to ease the whole car-purchase process.
Disclose your facts
There is no point in hiding the facts surrounding your car loan. For the dealership, this is better and more constructive. This is so the dealership can inform the lender so that the existing loan can be cleared with the possible outstanding balance.
Evaluate your potential losses
Every new car loan you incur will ultimately increase your monthly outflows for as long as the loan is outstanding. There is the possibility that this can become a reality even when the car is traded in because the trade-in value is insufficient to pay off the existing car loan. You may even experience negative equity on your vehicle where you own a value more than the market appeal of your car. This would make it very inconvenient for one who intends to trade in and not sell the car.
Reach out to the lending institution
Make sure to reach out to your lending institution concerning any possible charges that you may incur. Some types of loans can include beyond costs associated with loans in termination clauses that may need to be incorporated in risking amounts available for other purposes. Evaluate whether it is a good idea to purchase another automobile in light of discussing it with the institution.
