Your trade-in can be used as a down payment on your next car loan. As long as there's equity, you shouldn't have an issue trading in your current vehicle. If you have negative equity, you need to decide how you want to handle the trade-in process.
Trading in for a New or Used Car
Whether you're planning on a financing a new or used car, if you have a trade-in, it can help with any down payment requirement. The trade-in process is simple if you have equity in your vehicle: you bring in the car, have it appraised by the dealer, and the dealer can either cut you a check for the equity you have in it, or you can use it toward the down payment.
There are a number of advantages to a down payment if you're financing a vehicle. For one, a down payment lowers your monthly payment. Secondly, it might allow you to shorten the loan term (although a shorter loan term results in a higher monthly payment). Finally, whether you lower the monthly payment or decide on a shorter loan term, both lower the overall interest charges on your auto loan. This means your overall cost of financing is lower.
If you have negative equity, however, it can be tricky trading a car in. But you have a few options to choose from:
Trading in for a lease
While you can trade in your car on a lease, using it as a down payment won't lower the overall cost. Since interest charges are already built into the lease payment, putting money down won't reduce these charges. All it does is lower your monthly payment by acting as a prepayment. It won't reduce the overall interest charges and you won't be saving any money on your lease.
The Bottom Line
If you need a car loan, Auto Masters of Murfreesboro wants to help even if your credit is less than perfect. We work to help people in almost all types of credit situations - including bad credit, no credit, and even bankruptcy. Fill out our online auto loan request form today, and we'll get to work for you.
Charles Higgins has been in the automotive industry now for over 17 years. He has built a career by helping people with unique credit situations get financing. Charles believes everyone deserves the chance to build their credit while driving a reliable vehicle. Contact Charles today for your all of your credit needs.