When you want to upgrade to a newer, more reliable vehicle, you might consider trading in the car you have for a better one. If you need an auto loan when trading in a car, you might wonder how this works. Here are some vital details to know about this process, how it works, and what to expect.
You Trade in the Car and Loan
First, does the car you own have a loan on it? If you do not have a loan on the vehicle, you will not have anything to pay off. However, you will have to sign the title over to the dealership. Before you visit the dealer, make sure you find the title. If you cannot find it, you have two options. First, you could hang on to the car and keep looking for the title. Secondly, you could apply for a new title. It might take several weeks before you get the new title, but you must have a title to trade in a car that does not have a loan.
If you do have a loan on the vehicle, you will not have the title. The lender holds the title until you pay the car loan in full. When you trade in a vehicle with a loan, you must pay off the loan.
You Get a New Loan
When trading in a car with a loan, it might cause you to owe more money on your new vehicle than the amount the dealer was asking for it. When the dealer accepts your car as a trade-in, they will make an offer for it. If you compare the offer to the balance you owe on the loan, where does it stand? Is the dealer offering you more than you owe on it or less? If the trade-in value is less than the amount you owe, you will have a negative balance.
The dealer will still have to pay off your existing loan in full and will roll the difference into your new loan. If you want to avoid rolling the balance over, you might want to wait to trade your car in until you pay it off. Another way to avoid this is by bringing extra cash with you to the dealership to cover the deficit balance.
Getting a new auto loan is not hard to do. You can apply for one online or through a dealership. To learn more about trade-ins and auto loan lending, contact a lender today.
Share9 March 2021
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