They say timing is everything, but that's both true and false. The timing of trading in a car really depends on your situation, and just how ready you are to move on to another vehicle. Here's a look at some times you should trade in your car and some advice on when it might be better to wait.

The Top Times to Trade-In

When it comes to getting into a new vehicle when you're already driving one, you may actually have a few more options than someone coming in without a trade – especially if you have poor credit. The equity in your vehicle (if there is any) can help you place a down payment on the next car you're looking to finance.

As a bad credit borrower, there are a few times when it's better to trade in than not:

Before It Dies

If your vehicle is on its last leg or it's giving you signs that something major might be wrong, the time has come to consider trading in your car. It's never ideal to be stranded when your vehicle decides to kick the bucket, so don't wait for it to happen to start preparing your car for appraisal.

Most dealerships only accept running vehicles as trade-ins, with the exception of if they're running a push, pull drag event, where they accept cars in any condition. These events are rare, and typically only happen when dealer stock is low and demand for used cars is high.

It's also cheaper for a dealer to repair a vehicle than for you to take it in for service, so if the repairs on your car are more costly than your car payments, it's time to trade in.

When It Has Equity

When Should I Trade In My Car?Vehicles are depreciating assets, which means they lose value over time. When you finance a new car it loses about 10% of its value as soon as you drive it off the dealer's lot. Often, when you finance a vehicle that loses value right away you end up owing more for the car than it's worth. This is usually temporary since a car's depreciation rate isn't fixed. Making timely payments, or even paying extra when you can, can get you back into an equity position.

It's important that your car has equity if you intend to use its value as a down payment on your next vehicle. When you trade in a car with a loan on it, you have to pay off your current lender before the dealership can get the title. Any money you get from trading in your car goes directly to paying off your loan and if you're in a negative equity position, you have to make up the difference out of pocket.

When the Right Car Comes Along

Just like you can't plan for a breakdown, sometimes everything lines up and the right deal seems to fall in your lap. If this is the vehicle you've been searching for and it's within your financial reach, a trade-in can help you achieve your goal!

Be aware, however, that if this right deal comes along right after you just bought your current car, trading it in may have to wait. It's typically more difficult to trade in a vehicle that you've just purchased, and you may have to wait at least six months to a year for it to be financially feasible. If you trade in a car that hasn’t had much time to build equity, it may not help you with your next purchase.

Before You Default on Your Loan

Default isn't something that you want to happen, so if you find you aren't able to keep up with the monthly payments on your current vehicle it may be time to trade into something more affordable. If you're a bad credit borrower in need of a different vehicle, try a dealership that can handle special financing.

These dealerships aren't always easy to spot, but we can help point you in the right direction. Remember, a lot can go into the total cost of an auto loan, so make sure you're prepared to add them all to your car-buying budget. If you got in over your head on your current loan, make sure you calculate how much you can comfortably be able to afford and stick to it.

You can do this by calculating your debt to income and payment to income ratios, or by using an online car loan estimator.

The Trade-In Process

In order to trade in your vehicle, you first need to get it appraised to see what it's worth, and then find out your equity position if you're still paying on the car. To find your equity position, the first step is to get an estimate of your car's trade-in value.

To get an estimated trade-in value, visit a trusted online valuation site such as Kelley Blue Book, NADAguides, or Black Book and enter the information you're asked about your vehicle. Be as honest as you can with answers because this is just a jumping-off point. The actual cash value of your car is only what a dealer offers you for it.

When you know an approximate value for your vehicle, compare it to the 10-day payoff balance on your loan, which your lender can give you. If the estimated value is higher, you're in an equity position; if not, then you're upside down on your loan.

Remember that negative equity doesn't stop you from trading in your car, but you have to pay off your original loan first. If you own your vehicle free and clear then all the value it has is equity and can be used as a down payment on your next one.

In order to get the best value out of your trade-in, it's a good idea to get your car appraised by a few different dealers, rather than jumping at the first offer. We recommend visiting at least three dealerships, with one of them being a franchised dealer for your vehicle brand, as they may be able to offer you a higher price. Trade-in offers are usually good for around seven to 10 days to allow you to comparison shop.

Start With Us, Now!

If now is the time to trade in your car, we want to help you by finding a dealership that can work with you! Here at Auto Credit Express, we've built a nationwide network of special finance dealers that are partnered with lenders to help in many different borrower situations. When you have bad credit, no credit, or a recent bankruptcy, a subprime lender is a way to go for a chance at the auto loan you need.

Let us help you get on the path toward financing your next car by connecting you to a dealership in your area that works with credit-challenged consumers. All you have to do is fill out our fast, free, no-obligation auto loan request form, and we'll get right to work!