Is it time to finally trade in your car? There are multiple reasons as to why you may be on the hunt for a new set of wheels, and can include anything from a change in finances to a desire for a car that better suits your lifestyle.
Regardless of your motive for choosing to trade in your current vehicle, there are a few factors to consider before you start negotiating. Here’s how to lock in a game plan if you’re thinking about saying goodbye to your car and making the switch to a ride that’s right for you.
Decide Between a Trade-in or Refinance
Trading in your car or refinancing your current car loan are both viable options when looking to cut down on overbearing monthly payments. But before heading straight to the dealership, reflect on why you want to trade in your vehicle in the first place. If you’re hoping to downsize to a more affordable vehicle due to financial circumstances that you’ve encountered since purchasing your current vehicle, or maybe you’re just sick and tired of your ride, then a trade-in is probably the way to go.
But if high rates and terms that seem to be never-ending from your current lender are causing problems, ask yourself, should I trade in or refinance? You may want to consider refinancing an auto loan before jumping the gun. Your credit score and financial situation are bound to change over time, and refinancing a vehicle loan that you have elsewhere with Members 1st can help you save instantly and score the loan rates and terms that better fit your budget.
Determine How Much You Owe on Your Old Car
If a careful financial assessment brings you to the conclusion that it’s definitely time to trade in your car, the first thing you need to do is determine your current car’s value. Before negotiating the price of a brand new car at the dealership, you’ll want to research your car’s equity — or how much you owe on the car versus how much it’s actually worth.
While it’s entirely possible to trade in a vehicle that you still owe money on, positive equity can be applied as a credit to your new vehicle, while negative equity will have to be paid off. If you owe more on your vehicle loan than what the car is actually worth, this is what dealerships and lenders consider being “upside-down” or “underwater” on your car payments. If you have negative equity on your vehicle, you’ll either need to roll over the balance to your new car’s loan amount or pay it off in cash at the dealership.
Contact Your Lender for a Pay-off Amount
If you’re hoping to trade in a vehicle that you still owe money on, go to the source of your loan before getting trapped by a dealership who you don’t have a strong financial relationship with. Your independent lender such as a bank or credit union should take the time to sit down with you and review exactly what your pay-off amount will look like.
With the knowledge of what you owe on your old vehicle, you’ll have the tools to shop around for a dealership that can provide you with a new car at the best price possible.
Whether you’re on the market for a brand new car, a trade-in on your current vehicle, or a refinance of your existing car loan, a lender that you trust can make all the difference in receiving the best deal. Learn more about Members 1st of NJ’s Drive Home Auto Loans and secure your dream car with comfortable rates and terms today.