Owing Money On Your Trade-In

Owing money on trade-in is also known as negative equity. You will often hear this term at a dealership when you try to trade up your vehicle for a newer one.  And yes, it is possible to upgrade your vehicle while you still owe money on your trade-in meaning If your trade is worth less than what you owe, then the difference is called your negative equity. And again, The money you owe on your trade will also depend on the length of time you have had the loan. The longer you’ve been paying on the loan, obviously the smaller the balance owing. As much as possible, you want to avoid carrying over the amount of money you owe on your trade-in into a new auto loan. Doing so gives you a higher payment call that may require a longer term on the new loan.

Owing Money On Your Trade-In

There are three ways to deal with negative equity. Firstly, paying cash to rid of the money you owe on your trade- in is best. Secondly, If you are in the market for a new vehicle and  there are manufacturer’s rebates or cash incentives being offered then this would be an ideal time to upgrade providing the difference between your trade in and negative equity is within the rebate amount. Thirdly, lender’s will allow some room to accommodate the negative equity where you can refinance the balance owing by adding to the new loan..It is important to note that in order to qualify for this financing, you have to show good payment history on your current loan and an overall healthy credit bureau.

Owing money on your trade in

Once you know how much the trade in value is from the appraisal, you can then start working on finding out what you owe on your trade-in. The appraisal is based on the condition and kilometer of the vehicle, as well as any declarations, the year and model. Black book on-line will give you an idea of what your trade in value is for your trade. So keeping your vehicle in mint condition is to your advantage in getting a better trade-in value if your thinking of upgrading before paying off your current loan.

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