How Does Trade-In Work?
At a dealership, if the car that’s up for sale comes with a loan, the dealer will take it over when buying the vehicle. The seller needs to submit a few official documents so that the transfer of ownership becomes easier. These include:
- All the paperwork for the documentation of the loan
- Car insurance papers
- Driver’s license of the seller
- The car’s registration number
- Vehicle keys with any additional vehicular deposits
- Papers of the trade-in value
Before deciding on the trade-in, know that the numbers for the trade and the price of the new car are always open to negotiation. Use a car loan calculator to help figure out your options.
The Process For Trade-In
There are several important steps involved in trading in your vehicle. It’s crucial that you thoroughly understand each of these steps in order to make this process streamlined.
Estimate The Trade-In Value
After assessing the quality of the sellable car, its mileage, and condition, you’ll need to estimate its trade-in value before taking it to the dealership. Being equipped with these estimations will help you have a better idea of whether or not you’re getting a good deal.
Determine What You Owe On The Car Loan
It’s crucial to recognize where you stand with the auto loan. For instance, does the car have negative equity? In other words, do you owe more on the auto loan than the vehicle is actually worth? This happens when outstanding loans pile up and become eligible to be rolled into a new loan. Such a move isn’t recommended since it only leads to the seller falling deeper into larger monthly expenses.
Gather Quotes From Different Lenders
This option is pretty self-explanatory and well advised. A thorough market survey is essential before looking to trade. Talking to different dealers works in your favor since it’ll give you a broad spectrum of information and price ranges. This allows you to make an informed choice when choosing a particular dealership.
Negotiate The Trade-In Price Offered By The Lender
The last step is to negotiate the initial offer. Negotiating on the right terms and asking hard-hitting questions often gets dealers to up their trading prices. However, keep in mind that the ability to negotiate may not always be an option.
Trade-In: Positive Equity And Negative Equity
Trading falls under two broad categories:
- Positive equity: Trading in positive equity is the safest for the seller since the value of the sellable car is more than the outstanding loan amount. Therefore, the difference goes in favor of the seller who’s applying to buy a new vehicle
- Negative equity: This means that the value of the car is less than the car loan waiting to be paid. In this type of trade, the seller has to mitigate the difference between the outstanding loan after the car sale by paying either from his or her own pocket or by applying for another loan to help pay for the debt
You should conclude the process of a vehicle trade-in only after completing the following: compare and contrast quotes, negotiate, and carefully review the terms of the contract. Taking these steps will therefore make sure that you receive a just settlement. Moreover, remember that all forms of documentation of the sale must be carefully collected and preserved.