Wondering whether you can trade in a financed car? The answer is yes you can, but you’ll still be on the hook for any amount remaining on your initial loan. If you want to trade in a vehicle you’re still making payments on, you should definitely review the process of trading in a financed car before you start. If you have questions about how soon can you trade in a financed car or can you trade in a financed car for a lease, the experts in the Patty Peck Honda finance center can help.
How Does Trading In a Financed Car Work?
You’ll often find that when trading in a financed car, the value of your trade-in will be enough to pay off whatever remains on your loan. For example, if you owe $7,000 on your car, and the dealer offers you $8,000 for it, the loan can be paid off and the car transferred to the dealership buying the car. The remaining $1,000 can then be applied to the purchase of a new vehicle.
What Does “Rolling Over” A Loan Mean?
When a dealer offers to pay off your previous car loan, it is referred to as “rolling over” a loan. What actually happens, is that the amount owed on your original loan is added to your new loan. Essentially, when you roll-over a loan, your payments will both pay back the dealership and your current loan at the same time. Even if you trade in a financed car for a cheaper car, “rolling over” the loan is not necessarily the most cost-effective solution for most Jackson area drivers. That being said, it depends on the equity you have in your current vehicle. If the value of your car is more than the amount you owe, you’ll find it much easier to trade in a financed car for a cheaper one.
What is Your Vehicle’s Trade-In Value?
One of the most important parts in the process of trading in a financed car is determining what the trade-in value of the vehicle is. There are a number of online sources you can access to get an estimate on how much your car is worth. Here at Patty Peck Honda, we offer a quick and easy online value your trade tool. You can avoid the tiresome research by simply entering the required information about your car, and in less than a minute you’ll have the fair market value. Bring this information with you when you visit our dealership in Ridgeland and we’ll finalize the deal.
How Soon Can You Trade In a Financed Car?
There’s really no set time period as to when you can trade in a financed car. While it will largely depend on the terms of your current loan, it is recommended that you wait until you have built up some equity in the vehicle. Because of depreciation however, it can be difficult to build equity in your vehicle. A large down payment at the time of purchase can be a big help in building equity. Also, if you keep the loan term as short as possible, you’ll have a better chance of increasing your equity.
Can You Trade In a Financed Car for a Lease?
Wondering whether you can trade in your financed car for a lease? The answer is yes. As with trading in your financed car to purchase a new vehicle, you’ll want to get the trade-in estimate, and determine whether the value of the vehicle is less than what is owed on it. If so, you may be able to rollover the amount you still owe and have it included in your monthly lease payments. However, as stated above, this may not be the most ideal situation. If, on the other hand, the value of your car is more than you owe on the loan, opting to trade in for a lease can be a smart move.
Visit Patty Peck Honda Today!
Our finance team is always ready to help you learn more about the process of trading in a financed car, including explaining what a lease buyout is, and providing advice on what to do if you can’t make your car payments. Whether you wish to buy or lease, or want information about a credit-repair car loan, you can count on us. If you have any questions, please feel free to contact our finance team.