Have you had a change in lifestyle or stumbled upon an opportunity to sell your car that you just can’t overlook? There are many reasons why you might want to sell your car, but what happens if you still have finance owing on the vehicle? Trading in a financed car is something you may have to think about one day.
Let’s have a look at what you should know if this is something you’re considering.
Is it possible to trade in a car that’s still financed?
The simple answer is: yes. When you take out a car loan, you are signing a legally-binding contract and agree to pay back the full amount, including interests and fees. If you want to buy another car, you will still have to deal with this loan.
Ideally, you want to avoid buying a new car while you still have money owing on your previous one. What you should be doing instead is making sure that the existing loan is paid out in full before selling, or right after the sale.
A good reason for selling a financed car is knowing that you will drive away with a smaller loan, or one with a lower interest rate. But before you get to that point, there are a few things you should be doing.
Valuing your current car
Valuing your vehicle is a crucial step to take as it will give you a clear idea of how much money you will get for it. It should give you an indication of whether you should go ahead with the sale of the vehicle.
Discussing the sale of your financed car with your car loan provider
After you’ve decided to go through with the sale, it’s a good idea to check in with your car loan provider. They will be able to tell you if there are any early break fees or other costs associated with ending the loan before the timeframe. They may also give you sound advice on the most affordable way to get a new car and pay out your current loan as easily as possible.
Deciding whether you want to sell or trade your financed car
You can either sell your current car privately or take it to a dealership for a credit on your new car. Both of these options have their pros and cons, and will depend on your individual circumstances.
If you decide to sell it independently, you will have to take care of the repairs, advertising and transfer details. This requires a lot of time and effort, but can result in a higher selling price. On the other hand, if you take it to a dealership, you won’t have to worry about the cost of any repairs.
Whichever option you decide, you need to take your personal goals and the state of your current car into consideration.
In summary, the basic steps involved include: determining how much you owe, checking to see how much your car is worth, selecting a car that you want to buy and calculating the payment. Before you decide to sell a car that’s financed, it’s crucial that you do your homework.
