It’s a common question: Can you trade in your car when it’s still on finance? The answer is yes but it’s not always as simple as just handing over the keys and signing on the dotted line for a new car. Here’s what you need to know about trading in a car that’s still being paid off.
The first thing to keep in mind is that you’ll still owe money on your old car loan even after you trade it in. That’s because when you trade in a car the dealership will pay off the remaining loan balance on your behalf and then roll it into your new loan. So if you’re upside down on your loan (meaning you owe more than the car is worth) you’ll still owe that money after you trade in.
Another thing to consider is that your trade-in value may be lower than you expect because of your car’s negative equity. Most dealerships will only offer you the Kelley Blue Book wholesale value for your car which is often much lower than the retail value. So if you’re expecting to get a certain amount for your trade-in you may want to do your research ahead of time to see what it’s actually worth.
If you still want to trade in your car even knowing all of this there are a few things you can do to make the process a little easier. First try to pay down your loan as much as possible before trading it in. This will lower your loan balance and may increase your car’s value. You can also try shopping around to multiple dealerships to see who will offer you the best deal on your trade-in.
Just remember trading in a car with negative equity can be a costly mistake. Make sure you do your research and understand all of the potential risks before making a decision.
Can you trade your car in when it’s on finance?
No you cannot because the car still belongs to the bank or dealership.
If I’m looking to get a car on finance what kind of things will the lender look at?
The lender will look at your credit score debts income and employment history.
I’m thinking about getting a car on finance.
How much should I expect to pay in interest?
The amount of interest you’ll pay depends on your credit score.
Generally the higher your score the lower the interest rate.
I’m thinking about getting a car on finance.
How much should I expect to pay for the car?
The amount you’ll pay for the car will depend on the make and model of the car as well as the length of the loan.
I’m thinking about getting a car on finance.
How long will the loan be for?
The typical car loan is for 48 to 60 months.
I’m thinking about getting a car on finance.
How often will I need to make payments?
Most car loans require monthly payments.
I’m thinking about getting a car on finance.
Will I need to put any money down?
Some lenders may require a down payment but it typically isn’t more than 20% of the car’s purchase price.
I’m thinking about getting a car on finance.
Will I need to have full coverage insurance?
Yes you will need to have full coverage insurance if you’re financing a car.
I’m thinking about getting a car on finance.
Will the lender require me to have a co-signer?
This depends on the lender.
Some may require a co-signer if you have bad credit while others may not.
I’m thinking about getting a car on finance.
Will the lender run a hard credit check?
Yes the lender will most likely run a hard credit check when you apply for a car loan.
I’m thinking about getting a car on finance.
What is a hard credit check?
A hard credit check is when the lender accesses your credit report and this can lower your credit score.
I’m thinking about getting a car on finance.
Will the car be in my name?
Yes the car will be in your name and you will be the legal owner.
I’m thinking about getting a car on finance.
Can I trade the car in before the loan is paid off?
Yes you can trade the car in but you will still be responsible for paying off the loan.
I’m thinking about getting a car on finance.
What happens if I can’t make the payments?
If you can’t make the payments the lender can repossess the car.
I’m thinking about getting a car on finance.
What are the benefits of financing a car?
One benefit of financing a car is that it can help you build your credit.
