Yes, early trade-ins are possible when you finance a vehicle. In fact, there's no set time frame on trading in a car. Most dealers won't take a trade-in that's too fresh, though, and it's best to wait until there's equity in your vehicle before you try to trade it in.
What's a Trade-In?
When you trade in a car, you're essentially selling it to a dealership and financing something else from their lot, without the hassle of selling and buying with separate transactions. There are no hard-and-fast rules about how and where you have to trade in your vehicle.
However, it's beneficial to shop around and see which dealers can give you the best price, but you shouldn't just head to a car lot and ask what they're willing to offer you. When the time comes, there are several steps you may want to take to get ready for the trade-in process, especially if you're looking to trade in early before you've had the chance to close the equity gap.
Trading In Early and Equity
When you're trading in a vehicle soon after you've financed it, you're more likely to be in a negative equity position – owing more on your auto loan than the car is worth.
This is especially true if you financed a new vehicle, or a certified pre-owned car. Newer vehicles depreciate faster than used ones, which have typically already seen their biggest drop in value.
Depreciation is the loss of value over time and it can't be stopped. It can be slowed, though. The best way to do this is by using a large down payment when you finance. This reduces the amount you have to borrow, and leaves you owing a price closer to what the car might cost after you drive it off the lot. New vehicles typically lose around 10% of their value as soon as they touch the road.
If you don't have the equity to recoup your investment in a car, you have to make up that difference out of your own pocket. It's much easier to trade in a vehicle that can pay for itself, but this isn't always possible when you're trying to do so early.
Preparing Your Early Trade-In
When you know that you're starting with a deficit on your trade-in, it's a good idea to be prepared to get the most you can. Clean the car thoroughly, both inside and out, and make sure to fix any minor damage that may have occurred in the short time since you took out your loan.
Getting the vehicle detailed and fixing major mechanical issues isn't likely to result in a worthwhile increase to the cash in your pocket, so don't go overboard. Remember, you want to make as much money on this trade as you can, and it's probably cheaper for the dealership to fix any large issues.
Before you set foot in a dealer to get your trade-in appraised, it's a good idea to know approximately how much your car is worth. You can find this out by going to online valuation sites such as Kelley Blue Book or NADAguides. Be sure to be honest when you're inputting information, since it's the only way to get an accurate estimate of possible value.
Shopping for Trade-In Values
Once you have the estimates (which you should print or save to your phone), it's time to take your trade-in to get looked at. Taking it to a few different dealerships is a good way to find the best deal you can.
We recommend taking your early trade-in to at least three different dealers, making sure at least one of them is a franchised dealership that sells your vehicle's brand. A franchised dealer that sells your car’s brand may be more likely to offer a higher price.
Depending on your credit situation, it's likely a good idea to ensure you're trying to trade in your vehicle to a dealership that can work with your situation, especially if you have poor credit. And that's where Auto Credit Express can come in handy.
We have a nationwide network of special finance dealers that are signed up with subprime lenders who can help people in many different types of credit situations, including bad credit, no credit, and even bankruptcy.
The process is easy to get started – just fill out our free auto loan request form. We'll match you to a local dealership that can get you started on the financing you need after your early trade-in.