If you have a car that you won’t need after you get your next car you may be considering trading it in. If you are going to trade your car in you may have wondered how much can you get for your trade in. If you are going to trade your car in, please keep a few things in mind; One, if you owe more on your car than it is worth you aren’t using it as a down payment. This is called negative equity. To find out APPROXIMATELY what your car is worth go to kbb.com. This will give you some idea. Make sure you use the trade value and not Private Party value or retail. You cannot expect either of those values from the dealer. Then don’t look at excellent value, it says that LESS THAN 5% of ALL cars are in excellent condition. You can always negotiate your trade allowance with the car dealer just be realistic.
Browsing Posts tagged negative equity
If you have bad credit and are looking for an auto loan, the banks are usually going to look for a good equity position. The easiest way to achieve a strong equity position is with money down. If a car is worth $15,000 and you are financing $15,000 you have neither positive nor negative equity. To create a good equity position you must finance less than what the car is worth. If you have very little or no money down, you may be able to reach the desired equity position by purchasing a car from a dealer that was able to get the car for less than its actual value. This is not as common since usually cars cost approximately the same for all dealers; however it does happen. If you have flexibility with your car choices it will be easier for the dealer to match you with an auto loan that you can achieve the banks desired equity position with little or no down payment.
If you are upside down in your auto loan this simply means you owe more to the bank then you can get back on trade in, or outright sale to combat this you will need to do one of the following options 1) Roll balance over on to new loan. If this is done you are compounding the problem and will most likely have a greater amount of negative equity if you need to trade of your next car during the better portion of your auto loan. 2 Try to find a car that is much cheaper than it should be. If you can do this you should be able to absorb some or all of your negative equity. This will be difficult because dealers search all over the United States to find good deals, hence, everyone else is bidding on these deals too. They usually cost about what they should, especially in today’s market. 3) Pay the difference as a down payment, a combination of this and number 2 is the best way to approach it if you can but bear in mind, it is good to put money down anyway; Negative equity will just increase the amount you will need.
