Trading in a vehicle that’s paid off is a great way to put some money toward your next car purchase. Trade-ins are very common, and they often help bad credit borrowers meet auto loan eligibility requirements.
Vehicle Trade-Ins
If you completely own your car, you're in a good position when you want to trade it in. If you still have an active loan, some or all of your trade-in amount needs to be put toward your auto loan balance. Auto lenders place a lien on the title which stops borrowers from selling a vehicle that isn't paid off. Once the loan is paid off – either by finishing the loan term or paying it off with a lump sum – the lender releases the lien, which allows you to sell the car.
However, if your loan is completely paid off you don’t have to worry about getting a high enough offer to pay off your loan. This makes the whole process less stressful and when you accept a dealer’s offer for your trade-in, you can pocket the full amount or put it toward your next vehicle.
In order to get the most out of your trade-in, you should get a few different estimates by getting it appraised with a few dealerships. Call around to at least three dealers in your area before you accept an offer. We also recommend contacting at least one franchised dealership that sells your car’s brand. This way, you have more estimates and can accept the largest offer possible for your trade-in. Most trade-in offers are good for around one week, giving you time to weigh your options.
Sell it or Trade it In?
Selling your own vehicle privately means listing it in the right places, waiting for a bite, and then handling the paperwork by yourself. This typically means being available for test drives with interested buyers, drafting a bill of sale, possibly heading to the bank with the buyer, signing the titles, and transferring ownership at the Department of Motor Vehicles or the Secretary of State. If you're not prepared to take on these steps, selling your car yourself can be a hassle.
Trading in your car with a dealership can take the burden off your shoulders, all you have to do is get the vehicle appraised and let the dealer handle the rest. This is a good option, but you may not get as much for your trade-in as if you sell it yourself. Often, trade-in value is less than a private-party value because dealerships usually prep trade-ins to be sold on their lot. Since dealers are the ones that determine your car's actual cash value (ACV), your trade-in offer can depend on the condition of your vehicle, its mileage, the dealer’s current stock, and much more.
If you own your car and you want to skip the hassle of selling it yourself, then trading it in to a dealership is a logical choice. Plus, you can use its trade-in value to lower the price of your next vehicle. If you’re looking to get into another auto loan, trading your current car is like getting two birds with one stone.
Bad Credit and Trade-Ins
Trade-ins are very common and can help borrowers that need some cash down for their next auto loan. If you completely own your vehicle, your trade-in offer can help even more than if there's still a lien on the title.
Many lenders require down payments if your credit score is less than perfect. Subprime lenders who work with credit-challenged borrowers typically require a down payment of at least $1,000 or 10% of the vehicle’s selling price to qualify for an auto loan. However, you don’t have to use just cash to meet this requirement – you can use trade-in equity, too.
Get Matched to a Special Finance Dealership
If you want to sell your current car, and get in touch with lenders that can assist with bad credit, then consider a special finance dealership. You can skip the hassle of looking all over for a lender, and the dealer can handle the trade-in paperwork for you. Finding one of these dealerships can be tough, but we want to make it easier.
Trading in your current, paid-off car is a great way to satisfy a down payment requirement. You can also apply for financing with a special finance dealership if your credit score isn’t stellar. Here at Auto Credit Express, we want to help you find a dealer that has the resources to assist bad credit borrowers.
Get started right now by filling out our free auto loan request form. We’ve created a nationwide network of dealerships, and we want to match you to one in your local area.
