If you are considering trading in your car for a newer one but still have a title loan, the answer is yes, it’s possible.
Here’s how it works:
What to Do with Your Previous Car
When you buy a new car, you will likely think about what to do with your current one. Two main options are selling it privately or trading it in at a dealership. Trading it in can be more convenient for many people, despite having its pros and cons.
Trading in Your Vehicle for a New Car
Trading in your vehicle means selling it to a dealership to get cash or credit toward the purchase of a new one. The dealership will then sell your old car to another buyer at a higher price.
However, if you still owe on a title loan, the process can be a bit more complex. Questions arise about what happens to the title loan, how much you can earn from the trade-in, and more.
Calculating Your Equity
To trade in a car with a title loan, you need to determine if you have positive or negative equity. Equity is the part of your vehicle that you own outright, you can find out your car value here. Calculate it by subtracting the remaining loan balance from the resale value of your car.
- Positive Equity: If the difference is positive, you own more of the car than you owe on the loan.
- Negative Equity: If the difference is negative, you owe more on the loan than the car is worth.
Knowing your equity helps guide the trade-in process and payment plan.
Trading In with Positive Equity
If you have positive equity, meaning you own more of the car than you owe, you can trade it in and apply the equity to your new car purchase.
For example, if your car’s resale value is $15,000 and you owe $5,000 on the loan, you have $10,000 in equity. The dealership might offer you less (e.g., $11,000), leaving you responsible for paying off the remaining $5,000 loan balance.
Trading In with Negative Equity
If you owe more on the loan than your car is worth (negative equity), consider waiting until you have positive equity or pay off the loan completely. Alternatively, you can:
- Pay the Difference: Cover the shortfall between the loan balance and the car’s value.
- Roll Over Negative Equity: Include the negative equity in your new car loan.
Tips for Trading In Your Vehicle with a Title Loan
Whether you have positive or negative equity, consider these tips:
- Get Multiple Offers: Shop around at different dealerships to get the best trade-in value.
- Negotiate: Don’t hesitate to negotiate for better terms.
- Verify Loan Payoff: If trading in with a title loan, ensure the dealership pays off the loan on your behalf.
Conclusion About Trading Your Car With A Title Loan
Trading in a car with a title loan online for a newer one is possible but requires careful consideration. Follow these steps to navigate the process smoothly and avoid complications.
TFC Title Loans has been helping people to use the equity in their vehicles since 1994, we are here to be your broker.
