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Still Owe Money On Car Trade In – Yes! There’s no need to worry if you’re ready to buy a new or used car but still have a loan on the car you currently own. There are a few simple steps to follow to better understand your options.
First, contact your bank to see what you owe on your car. This will help you understand how much your car is worth and what the difference is. You can then check our KBB trade tools page to find out how much your car is worth. This will help you determine your purchasing power and we will help you find the perfect car!
Still Owe Money On Car Trade In
Whether you have a car loan or not, trading in your car is easy when you work with Hometown Chevy in Waverly, OH. You can check out our finance department, get pre-approved and use our payment calculator right on our website! We know it can be difficult to trade in your car and buy something new. We pride ourselves on providing you with a smooth, stress-free experience.
Trade Ins: Navigating The Trade In Process With Ease At Dealersmarket
Visit our website and browse our new and used inventory! Need help using our site’s tools? Stop by Hometown Chevy in Waverly, OH and let us help you! Why Choose Chevy City? Read all about us here and see why we are your best seller! Canadian auto brokers help Canadians get the best auto loans with low rates, down payments and repayments of up to $30,000.
The average Canadian now has nearly $73,000 in total debt. Non-mortgage debt, which includes credit card spending and, yes, car loans, accounts for nearly a third of that, or $23,800.
In addition, every third car sold in 2018 had negative equity. All of these “negative savings” had an average value of $7,051.
If you’re one of those people, you’re probably wondering, “How do I get rid of the negative balance on my car?” You may not even be sure what these negative values are and how they affect your finances.
Is Now The Time To Buy, Sell, Or Trade In A Car?
Don’t worry because we are here to explain things to you. Read on to learn all about negative equity cars and what to do about it!
The word “equity” refers to the ownership of property and the “liabilities” attached to it. Liabilities often take the form of debts or loans.
When it comes to car loan obligations, it’s usually about how much you still drive to the lender. Negative equity occurs when the amount owed exceeds the actual value of the vehicle. Some people also refer to these as “reverse” or “underwater” car loans.
Either way, this means you owe more money to your auto lender than the car is worth in cash.
How To Trade In A Financed Car: Everything You Need To Know
It is very easy to know if you have a negative net worth by knowing these two basic things. Then, simply subtract the remaining balance of your auto loan from the market value of your ride. If it is negative, then you have negative equity.
Let’s use the average car loan debt of $20,000 in Canada as an example. Let’s also say that the fair market price of your car is now only $15,000.
So $15,000 (the market value of your ride) minus $20,000 (the balance on your car loan). This means you have negative equity worth $5,000.
Fee payments, interest rates, credit scores and down payments all play a role here. The same applies to the loan term you choose, the type of car you drive and your driving habits.
Trading In Your Vehicle
We will quickly cover all aspects below so that you can better understand how negative equity can end up.
New cars, on average, depreciate 30% to 40% in just the first year. Many resist depreciation better, while others lose more. Japanese cars like Toyota and Honda are the cars that seem to hold the most value over time.
You may also end up with a negative balance if your car is rapidly depreciating. The same is true if you make smaller monthly payments on your car loan.
The average car loan interest rate in Canada is between 4.5% and 10%. The lower the interest rate you can get, the more you owe the lender in total. This, in turn, reduces the risk of your car loan being “underwater”.
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Conventional car loan lenders, like banks, consider credit scores. As a result, they typically charge higher interest rates to Canadians with low or poor credit scores. Many others dismiss such candidates.
That said, your credit score is one of the most important things to know before applying for a car loan. You can get one from Canadian car dealers for free and it will tell you about your financial situation. If it’s too low, don’t risk a credit check from the bank, which could reduce it further.
Making a down payment on a car loan reduces the amount of principal the lender needs to collect. As a result, the borrower owes less to the lending institution.
This also means that the interest rate is applied to the smaller loan. Hence, you can enjoy a lower interest rate.
Ways To Boost Car Trade In Value
Generally, a down payment reduces the difference between the borrowed money and the actual value of the car. On the other hand, failure to make down payments can also contribute to negative value.
If you can pay off your car loan in five years, you must ensure a five-year loan term. This is because the longer the period, the higher the interest. This, in turn, increases the total amount you owe on your car.
The make and model of your car also affects the price, so the more modern your car, the more expensive it will be. Luxury cars are more expensive to insure, which can also increase the cost of your car.
When it comes to driving, excessive wear and tear during driving leads to rapid wear and tear. Lack of proper care also leads to rapid deterioration. All of these can cause your car to depreciate under similar makes and models.
Information About Used Cars By Annablack1997
Negative equity is usually not a big problem if you plan to keep your car as long as it will serve you. In Canada, this typically means driving one car for an average of 12.88 years. In this case, you may not even know you had a negative balance at some point.
Paying more on your car loan than it’s worth becomes a problem if you want to trade in a new car in just a few years. If you are found to have a negative balance, you will no longer be able to use the old car to pay for the new one. You’ll still end up paying more than you likely budgeted for a new car.
The situation can be worse if you have a bad balance and your car is completely damaged in an accident. Your car insurance company will write you a check, but it still won’t be enough to cover the entire car loan debt. You will have to cover the rest with your own money.
The same thing happens if you get sick, lose your job, or face a major life event that makes it difficult to repay the loan. You can’t just sell the car because it still has debt. Even if you find a willing buyer, the proceeds from the sale still won’t be enough to pay off your car loan.
Can You Trade In A Financed Car?
Refinancing is one of the best options to remove negative equity from your ride. You can even get a financing plan or buy a new car and cancel the payments you still owe on your old car!
Many Canadians cannot afford not to own a car, given that 11.4 million of them drive to work. If going carless isn’t your thing, then you might want to consider refinancing your current car loan.
Refinancing gives you the opportunity to lower the interest rate on your car loan. With a refinance loan, you take out a new loan to replace the old loan (with potentially high interest). This is a new contract that allows you to get not only a reduced interest rate, but also better payment terms.
When you refinance your auto loan, you can choose to change the loan term to a shorter one. This will help you avoid an underwater loan because you will be paying more for the loan. Making larger payments on your loan reduces your car’s negative equity.
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A lower interest rate also means you can make the loan cheaper. The lower the rate, the less money will be used to pay interest only. Meanwhile, most of your loan payments cover the actual principal of the loan.
The lower your principal amount, the lower your negative balance. Also, remember that financing does not involve selling your car
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