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    How to Trade In Your Financed Car

    Damien Frost
    Damien Frost - 2020-09-02T21:00:00.000Z
    Financed Car

    It’s very much possible to trade in your financed car.  However, if you want to trade in your car, the loan on it doesn’t just go away. Even if you have turned the vehicle into the dealership, you’ll still be required to pay the remaining balance.  

    Most dealerships allow you to trade in your financed car for a new car. Depending on the equity you have in the car, the lender will quote you a price. The best part is that this price is negotiable. Keep reading to learn about the best ways to part with your financed car.

    How To Trade In Your Car

     Trading in your vehicle, especially if it’s been financed, requires a few necessary steps. Here’s how you proceed:

    • You’ll first have to determine the remaining balance on your loan. This can be done by reviewing your monthly statement
    • Get a vehicle value estimate from any online tool. By doing this, you’ll be able to assess the current value of your vehicle
    • You’ll have to get your current vehicle officially appraised by bringing to the dealership that you want to buy your new car from. Only after the vehicle is physically inspected and appraised will the dealership officially establish the actual worth of the car
    • If you want a quick and straightforward process, accept the initial offer made by the dealership. If not satisfied, you can try to negotiate for a higher trade-in offer
    • Do your calculations. If the loan balance is less than the offer made by the dealership, then you’ll have some money left over that will help you to purchase the new vehicle from the dealer
    • If the remaining balance is more than the trade-in offer, you’ll still owe the loan balance, which is called negative equity. If you have negative equity, many dealerships will offer you the following options:
      • Pay off the remaining amount that you owe before buying the new vehicle
      • With the help of the dealer, you can trade your vehicle for a new car and roll over the balance of the old vehicle loan to your new vehicle loan

    Payoff Amount 

    If you owe money on your current vehicle, contact your lender and ask for the payoff amount. This could be a little higher than the remaining balance you have. With the help of a pricing guide, check the current trade-in value of your car. There are many online pricing guides such as the Kelley Blue Book and Edmunds. 

    Compare the values by subtracting the payoff amount from the trade-in value of your current vehicle. Though the final price can be negotiated, you’ll have an idea of whether your current vehicle holds positive or negative equity.

    Positive Equity

    This occurs when the remaining balance of your current vehicle loan is less than the trade-in value of the car. With the difference in the amount of equity, you can directly apply this amount to the purchase of a new car. Alternatively, you can also use the equity to make the down payment.  

    • For instance, if the total outstanding loan is $8,000 and the value is $10,000, it means that you have $2,000 in equity to use towards your next car

    However, for the remaining balance of the car’s purchase price, you’ll have to take out an auto loan if you don’t want to pay for the new vehicle outright. See to it that you get the full agreed-upon value of the car that you have negotiated. The trade-in value will be listed in the contract of your new vehicle. 

    Negative Equity

    Negative equity is when you owe more on the loan than the value of the car. 

    • For instance, if you owe $12,000 on the loan and the value of the car is $8,000, you’ll still need to pay $4,000 to the lender to cover the difference

    When you have negative equity, it’s a good idea to get a payoff quote from the lender. Use online tools to estimate the trade-in value of your car. Then, subtract the payoff quote from the value to get the amount of negative equity. If possible, you must also try to get a preapproval for the next loan. 

    Bottom Line

    Once you have found the best deal that suits your needs, make sure to review the contract carefully and verify that everything agreed to is in writing. If needed, use a calculator to run the numbers. You can expect a settlement of the loan account in a few weeks and the accompanying documentation to be mailed to your address.

    Financing Your Next Mazda

    Once you’ve realized that you’re ready to drive your very own Mazda model, there are two possible ways of making that a reality. You can either opt to select from the various financing plans provided by the company itself or look for a lender, credit union, or bank that provides auto loan financing. 

    If you choose to go with Mazda Financial Services, the list of affordable plans include: 

    • Mazda Personal Contract Purchase (PCP) 
    • Mazda Conditional Sale 
    • Mazda Personal Contract Hire 
    • Cash Buyer 

    Each plan has different features that can easily be compared with financial plans provided by other lenders. After learning the terms and conditions of each plan, applicants will better understand what their options are. Those options include: 

    • Partly exchange the car 
    • Own the car by paying its guaranteed future value
    • Return the car 

    Selected Mazda Models

    The MX-5, Mazda3, and RX-8 are just a few of the brand’s more creative designs that prove it’s continuously producing some of the best looking automobiles of its time. Here are the innovative Mazda models that are taking the 2020 market by storm.

    Mazda 3 

    The Mazda 3, a lavish sedan and hatchback, comes with all the unconventional safety measures you’ll need while driving. The design is a part of the fourth generation that was introduced in 2019. Features include:

    • Advanced dual front airbags for additional safety 
    • Premium interiors with durable materials 
    • Sharp handling for exciting rides  
    • Outstanding audio and instrumentation features 

    The MSRP of the model depends on the engine, yet the car can still be purchased by paying an average amount, ranging from $21,000 to $26,500. 

    Mazda CX-3 

    Mazda CX-3 is the very first model from the CX-30 generation that was launched in 2020. It’s available in both extra small and small-sized SUVs. This car is known as the best compact car with all-wheel drive and the features including:

    • Swank, high-quality interiors 
    • Standardized safety features 
    • Refined ride quality with poised handling 

    The MSRP of this new model ranges from $21,900 to $29,600, depending on the size and engine that you select. 

    Mazda CX-5 

    With its incredible exterior, this iconic SUV ranks among the top compact SUVs on the market. Mazda CX-5 is created with an engaging performance that sets it apart from other competitive models introduced in 2017 and features include:

    • Enhanced noise reduction 
    • Standardized safety measures 
    • Acute steering and handling
    • Attractive interiors with a turbocharged engine 

    The stylish compressed model is available with an MSRP ranging from $25,190 to $37,155. 

    Mazda CX-9 

    This model is one of the most iconic and attractive sports cars on the market and was originally launched in 2016. The model comes with dual USB ports, unlike other signature and grand touring models. 

    • Premium interior with signature trim  
    • Energetic handling 
    • Quiet and comfortable for highways 
    • Spontaneous infotainment edges 

    This CX-9 second-generation model from Mazda is available with an MSRP ranging from  $33,890 - $46,215, depending on the engine you select. 

    Mazda MX-5 

    The Mazda MX-5 model is available in two varieties: the Mazda MX-Miata convertible and the Mazda MX-5 Miata RF Convertible introduced in 2016. Here are the main features of this car:

    • Sublime handling and steering 
    • Fixed roof coupe security 
    • Electronic folding roof 
    • Android Auto and Apple CarPlay trim levels 

    This groundbreaking model ranges with an MSRP ranging from $26,580 to $34,750, depending on the model you select. 

    Loan Options

    The first step towards financing your vehicle is to check out various auto loan options that are available to you in the market. Make sure to pay attention to each plan’s financing requirements and interest rates. 

    If you have a good credit rating, check out Consumer Credit Union as they offer the most competitive rates. If your credit score is on the lower side, you can try applying with Springboard. This lender is known to offer subprime auto loans to individuals with bad credit.

    If you want to refinance an existing loan at the best rates, make sure to check the rates offered by OpenRoad Lending. They partner with a wide number of banks and credit unions to offer a variety of car-related financing products.

    Bottom Line

    Mazda has excellent car models that can be a perfect fit for any budget. Have a look at the new and upcoming models to choose a car that best suits your lifestyle. Then, compare the available financing options and choose a good deal.