Weighing Your Options for Trading in a Vehicle
If you’re shopping for a new vehicle, you may consider trading in your current one. It may seem like a “given” that trading in your vehicle is precisely what you’re supposed to do – but you have options!
Before trading in your vehicle, consider the value of your car and alternative options like selling your car privately or finding an alternative use for it. No matter what you decide to do, we can help you navigate your options – including getting preapproved for a loan on your new ride.
Consider your car’s value against what you owe.
If you’re still making payments on your current vehicle, you’ll want to see how much it is worth. Can you get as much as you owe or more out of it? If not, the dealer may tack the difference on to a loan for a new vehicle – leaving you "upside-down" on your new loan.
The term “upside-down” means that you owe more than your vehicle is valued. If you choose to trade in this vehicle, knowing you’ll owe more, then it is important to invest in a gap warranty. This is a unique warranty you get at the time of your vehicle purchase to “insure” the full value of your vehicle – even if you’re "upside down."
Think about selling your car privately.
A great alternative to trading your car in with a dealer is to sell it privately. When you trade-in, the dealer ultimately offers you less than your vehicle is worth since they will also be looking to make a profit when they resell it.
While it may take more time, selling your car privately is an option. Many web sites allow you to list your car for sale. If you still owe money on your vehicle, you’ll want to make sure you make enough to pay back that loan so you can transfer the title to the new owner.
Find an alternative use for your car.
If you’ve already paid your car off, why trade it in? If you have the means and space to keep it, having a backup isn’t a bad idea. You can drive it once or twice a week to keep it running and have it if you ever need it. For example, you can use it for road trips or other long drives to save miles and wear off of your new vehicle.
Alternatively, you may think about people who need a “new-to-them” vehicle. Maybe you have a niece or nephew beginning to drive, or perhaps you have an older relative that needs a reliable vehicle. If so, think about ways you can help them while also recouping some of the money you invested in your vehicle.
Choosing what to do with your current vehicle after a new purchase is a big decision. If you have questions about your vehicle’s value, your options for trading up or investing in a gap warranty on a new loan, our team is here to help.