It isn’t unnatural to become fed up with your vehicle. Whether your car isn’t meeting your personal needs, or is in constant need of repairs, there are plenty of circumstances that make the option of trading in your car a choice. But what if you are still not done paying it all off?
The good news is that most dealerships welcome trade ins, even when a car isn’t entirely paid off. Trading in a financed car is evaluated like this: A dealer considers your vehicle’s entire equity, and uses the total balance to discern the trade in value. In the case that you’ve successfully paid off your vehicle, the dealer will recognize the car’s value as equity, and apply the amount towards your new car. For example, if your vehicle is worth $10,000 and you owe $6,000 on it, you will have $4,000 in equity to direct towards your new vehicle’s payment.
On the other hand, if you owe more on your vehicle than your car’s appraisal, then this is called ‘negative equity’, where you cannot pay off the balance of your loan even if you are offered the full value of the vehicle. Thus, if you owe $10,000 on your vehicle and it is only worth $8,000, you would have $4,000 negative equity. In this instance, many dealers will still permit you to trade vehicle for vehicle, although it is likely that the amount you are financing will increase.
If you are looking to trade in your vehicle either for an upgrade or a lower rate on your financing, you should start by researching the value of your vehicle using online resources, financing documents, or using a Trade In Calculator in Canada. This will help you determine your approximate equity before you approach the dealer, while maintaining a pragmatic idea of your vehicle’s value.
Call Canada Auto Experts at 1-855-550-5565 to link yourself up with a specialist who are have access to major dealerships in your area. They will appraise your vehicle strategically, as well as work hard to get you best rates and financing options to build your credit. At Canada Auto Experts, we also offer you the option to refinance your car with lower rates.