If you are currently looking to trade your used vehicle for something new, more current or simply more relevant to your lifestyle, you probably have a lot of questions. Funds, negative funds, exchange value and how all this is calculated can be complicated, especially if you have never traded a vehicle or the one you own is not fully paid. To help you unravel the process, we’ve developed everything you need to know to trade your vehicle, whether it’s paid for completely or not.
How to exchange a used vehicle?
If you are doing the market to find a new vehicle, or new to you, you probably want to trade your current vehicle. Exchanging your used vehicle can bring you a surplus of money that you can use to pay for the new vehicle.
This is a great option for most consumers, but there are some tips and tricks you need to know in order to take advantage of it.
1 Do your own research. Your dealer will evaluate your used vehicle at a certain value, but doing a bit of research beforehand will let you know if you are being fooled or not.
2 Be realistic. While we want you to have a good deal, it’s also important that you stay realistic. The value the dealer will give you will be considerably less than what you paid.
3 Be organized. When will come the time to meet the dealer to exchange your current vehicle, have in hand all the necessary information and documents.
4 Be honest. Do not lie about the condition of your vehicle. Sooner or later your dealer will know it.
5 Let it be known that you have already researched the value of your vehicle. While most dealers will not try to take advantage of you, you still want them to know that you’ve done your research and know the value of your vehicle.
How is the exchange value of your vehicle calculated?
If you still make payments for your vehicle, the dealer will take the value of the vehicle as the fund to be used for a new vehicle. For example, your vehicle is worth $ 15,000 and you currently owe $ 10,000 on the loan. That means you have $ 5,000 of funds that can be used to purchase a new vehicle. On the other hand, you could also have what is called a negative background.
What is a negative background?
A negative bottom is when you owe more than the value of your vehicle. For example, you have $ 8,000 to repay on your loan but your vehicle is worth only $ 7,000. You have $ 1,000 of negative background. Here is the catch: some dealers will say that they are trading vehicles that have a negative background but most of the time, they are not sincere. Dealers pick up the vehicles and add the negative backing to your new loan, increasing the amount and interest you’ll pay.
If you know that your vehicle has a negative background, you should consider the following points before making an exchange:
- Postpone the purchase of a new vehicle until you can repay a larger amount of your loan and have a positive bottom line that will not affect your new loan.
- Try to sell your vehicle privately. You will be more likely to get a higher amount for your vehicle at a private sale than from a dealer.
- If you still want to trade your vehicle, be sure to ask the dealer how your negative bottom will be handled. If the dealer makes verbal offers or promises, ask for it to be included in the written contract.
- Make sure that the negative background of your previous vehicle will not affect the loan of your new vehicle too much. Try to take a new loan with the shortest terms. In this way, you will be able to repay it and have a positive bottom sooner.
Car financing 101
Buying a new vehicle takes a lot of time and money. That’s why it’s important to find a good dealer and creditor with whom to do business. If you are currently looking for a professional in your area to finance a new vehicle, van, truck or even a recreational vehicle, contact us. We can help you find someone immediately.