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If you’re currently looking to trade in your used vehicle for something new, updated or something simply better suited for your lifestyle then you probably have a lot of questions. Equity, negative equity, trade in value and how all of that is calculated can be quite confusing especially if you’ve never traded in a vehicle before or if your vehicle isn’t fully paid off. To help you navigate the process with ease, we’ve put together everything you need to know about how to trade in your vehicle, whether it’s fully paid off or not.
Learn how to check the history of a used car.
If you’re in the market for a new, or new to you vehicle then you’re also probably looking to trade in your current vehicle. Trading in your used vehicle can provide you with some extra cash to put towards paying off your new vehicle.
Trading in your used vehicle is a great option for most consumers, but there are a few tips and tricks you should know so that you get the best return possible.
When trading in a car that hasn’t been paid off yet, you’ll need to provide the dealership with certain documents before you can begin the process.
If you’re currently still making payments on your vehicle then a dealer will take the value of your vehicle as equity and put it towards your new vehicle.
When your car is worth more than what you still owe on your car loan, you’ll have positive equity. Having positive equity is advantageous as the difference between what the car is worth and what you owe on it can be used towards purchasing a new car. For example, if your car is worth $15,000 and you still owe $10,000 on the loan. This means you have $5,000 worth of equity that can be put toward your new vehicle. On the other hand, you may have what dealers call negative equity.
Find out which cars have a high trade in value.
Negative equity is when you owe more on your vehicle than it’s worth. For example, if you still have $8,000 left to pay off on your loan but your vehicle is only worth $7,000, you have $1,000 in negative equity. Here’s the catch, some dealers will say that they take trade-in vehicles that have negative equity but more often than not they’re not being completely truthful. What these dealers do is take the vehicles but then add on the negative equity to your new loan thus increase the amount you owe and the interest you’ll pay.
Find out if you should trade in your used vehicle or not?
If you know that your vehicle has negative equity you should consider the following before you decide to trade it in:
Learn how to avoid car loan debt?
Purchasing a new vehicle of any kind is both a huge investment in time and money, that’s why it’s so important that you find a great dealer and lender to work with. If you’re currently looking to speak with someone in your area about financing a new car, van, truck or even recreational vehicle give us a call. We can put you in contact with someone right away.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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