Curious about using your old car as a down payment for a new one? Join us in our latest video blog, “Can I Trade In My Vehicle As A Down Payment?” as we dive into the criteria that determine whether your trade-in can become a valuable asset in securing a loan.
Understanding the concept of “trade equity” is key—discover the difference between your car’s worth and what you still owe on it. Uncover the surprises that may arise when dealers assess your vehicle, factoring in costs like repairs and cleaning that could impact its value. Whether your car is fully paid off, has trade equity, or faces negative equity, we break down the options available. Learn when trading in can be a smart move, potentially saving you money on interest, or when it’s best to consider other alternatives. Tune in for expert insights and make informed decisions on your automotive journey!
Can I Trade In My Vehicle As A Down Payment? – Video Transcription:
If you’re wondering whether you can use your old car as a down payment for a loan, there are a few criteria you must meet.
First off, “trade equity” means the difference between what your car is worth and how much you still owe on it. The dealer figures out the value of your old car after test-driving it, checking it out, and looking at auction reports.
Sometimes, people are surprised to find out that their car isn’t worth as much as they thought. This is because the dealer considers costs like fixing and cleaning the car, which can lower its value.
Now, if your car isn’t fully paid off, it falls into one of two categories:
The first category is Trade Equity. If the value of your old car is more than what you still owe, that extra money is called trade equity.
The second category is Negative Equity. If the value is less than what you owe, it’s called negative equity.
Some lenders might let you trade in a car with negative equity, but keep in mind that the new loan will include money for both the old and new cars. This is unless you give enough cash to cover the entire remaining loan on your old car.
Considering a trade with negative equity might make sense if it saves you money in the long run. For example, if your current car is out of warranty and needs expensive repairs, and those costs are more than the extra interest you’d pay on the new loan.
In short, if your old car is fully paid off or has trade equity, trading it in can help you pay less interest. But if your old car has negative equity, it might only be a good idea if you’re avoiding costly repairs and can balance out the higher interest costs.