Trading in a Car: Important Terms You Should Know

Cars are getting expensive, and it is getting harder and harder to finance a good car that meets all your requirements. You might have to break the bank or get a high-interest-rate loan just to drive a car you love.

This is also true for luxury cars. As the prices continue to rise, luxury cars have become even rarer. In fact, with the limited car financing options out there, we barely see these cars anymore. However, selling your old car to buy a new one is a much better option.

There's nothing better than a trade-in for your old car. Contacting a reliable company that can connect you with multiple dealers helps you get that car sold faster than if you tried to sell it yourself.

Here are some terms you should know when trading in your car:

1. Rolling Over

A trade-in at a dealership gives you much more financial security than selling the car yourself. If you want to sell your used car at a reasonable rate without worrying about financial loss, trust a dealership to do the work for you.

However, oftentimes, trading in your used car can be hard as you still have some outstanding loans to clear before you put it on the market. Car financing is a big responsibility, and it is hard to pay off all of your loans before you put your old car up for sale. If your car still has an outstanding loan, this may discourage buyers.

This is where the term "rolling over" comes into play. When trading in a car with an outstanding loan, your dealer may offer a "rollover" – which means the remaining loan balance for the used vehicle is added to your loan for your new purchase.

A reliable and educated dealer will guide you on the best scenario for selling your used car and purchasing a new one. They can maximize the benefits of the sale and purchase. Once the loan is moved over to your new loan terms, the used car automatically becomes more attractive to potential buyers.

2. Negative Equity or the "Upside Down" Scenario

A dealership can help you connect with worthy buyers who take your vehicle off your hands in no time. You don't have to analyze market trends or check for the most popularly demanded vehicles. You can trust the dealership and trade in your vehicle!

However, how your vehicle is valued also depends on its inherent value and the negative equity attached to it. A trade-in doesn't just involve the value or cost of your car. Your dealership will often consider how much you owe on the car.

If the amount you owe exceeds the car's worth, you are "upside down" on your car. This can also be rephrased as the car owner has negative equity. You must check whether you have a lot of negative equity before the trade-in, as the dealer will add it to the cost of your new vehicle. This can also be avoided by paying off your loan first and shopping after.

3. Trade-In Value

If you are eyeing luxury cars and don't have the money to buy them yet, a trade-in is a great way to open those doors. You don't have to wait for other car financing options anymore. You could decide to trade in that vehicle and get the one you want.

Although a trade-in allows you to determine your used vehicle's value easier, you still need to consider a few factors before setting a preferred number. Do not overestimate your vehicle's value, as chasing multiple dealers can waste precious time. After all, you want to procure the next car as soon as possible.

A trade-in value is exactly what the name suggests. It is the amount a dealer is willing to offer you for your vehicle. This amount fluctuates depending on the car's age, mileage, current market demand, and where you live.

4. Down Payment

A down payment on a vehicle essentially means paying a value upfront or in the beginning before deciding on your loan terms. This is a one-time payment that is deducted from the total purchase price. The more your down payment, the lesser the further monthly payments.

A higher down payment can also decrease the interest rate on the vehicle as it provides the dealer or lender with a guarantee or trust for future payments. With higher down payments, the future terms can also be shortened, helping you gain ownership more quicker.

5. Lease

Luxury cars mean paying a lot more than your used car's worth. Car financing, in this case, may be challenging for some people. When you trade-in your used car, you might have the option of leasing a new one for a period.

Leases depend on the terms that are predetermined on which monthly payments are acquired until the term ends. It is much like a loan, except the car is never added to your ownership.

How much you drive the vehicle will determine the vehicle's value when the lease ends. You can return the vehicle to the lender or buy it until it drained its lease value. Remember, this is a short-term option if you want to invest in a new vehicle since you can't own a leased car.

Final Thoughts

Buying and selling cars is much trickier than you may think. If you are looking for luxury cars, be prepared to pay a huge price tag. Trading in your previous vehicle may help you cover the financial costs involved. However, you still need to decide how you want to trade in.

Contact a reliable dealer who can assist you in this process. The best dealer will connect you to multiple buyers and help you reach the ideal price. You don't have to worry about placing your vehicle on the market or determining a price. The dealership can guide you best.

Take that first step and get a quote to get started. Be it a luxury car you require or a simple one; the best route is one that goes through an experienced professional dealership!