After you've had your vehicle for a few years, your transportation needs may have changed. Whether your family has a new little addition, or your kids have grown and moved out on their own, the size and type of car you need can change often during your lifetime. At this point, there is one of two choices: Trade-in or Sell. The question is though, if your loan is not paid off what happens to it?

At Auto Credit Express, we've helped many prospective buyers make the best choices with their current vehicles. We want to help you too, so consider this information we have for you.

Your Vehicle's Worth Matters

What is Refinancing?

Whether you decide to trade-in your car or sell it yourself, one thing remains: you have to be able to pay off your loan. The option that most people looking to swap their ride go with is to trade-in the vehicle under debt. The dealer will first want to know what the payoff value is; ask your lender if you don't already know. Then, depending on how much you owe on the vehicle and what it's trade in value is, things will go one of two ways.

If your payoff value lower then the value of the vehicle, things are fairly easy. Say you owe $7000 on the car, and the trade-in value is $8000, then you will have $1000 to apply towards the purchase of the newer car. It may not be as much money as you would like but it clears your old debt and gives you some money towards your new car.

Trading In while Upside Down

However, if the money owed on the car is more then the value of the vehicle, this is what is known as being upside down on your car loan. This can often throw a wrench into your purchasing plans, because if you say owe $7000 on your car still, but the car is only worth $5000, then you will have to pay the $2000 out of pocket or roll the old debt into your new loan.

Carrying your old debt into your new loan however should not be considered lightly, especially if your new loan is a bad credit car loan. That $2000 you carry over will be subject to the new financing rate, and in the case of a loan with a high financing rate you could be costing yourself quite a bit of money. If your situation isn't dire, you may want to strongly reconsider trading in until you're right side up on your loan, or able to pay off the additional debt without carrying it over.

As We See It

Deciding what works best can be pretty stressful and frustrating, and circumstances may force your hand even even if trading in proves costly. Remember, you can always try to sell the car yourself.

At Auto Credit Express we're all to familiar with the difficulties people face when trading in their vehicle, which is why with our countrywide network of affiliate dealers and years of bad credit know-how we'll work with you to help you decide the best move to make!

Simply complete our online auto loan request form, and we'll be on the phone with you soon! Or if you really cannot wait to talk with us, call our number so we can make your next car buying experience to be the easiest it can be. Get started today!