Navigating the Process of Trading in Your Car Before It’s Paid Off
One of the frequently asked questions in the auto industry is, “Can I trade in my car if it isn’t paid off?” This question stems from the misconception that you cannot trade in a vehicle if you’re still making payments on the auto loan. If you’re considering trading in your car before it’s paid off, you’ll be glad to know that most dealerships are perfectly fine with this arrangement. However, whether it’s a wise decision for you depends on several factors.
Trading in a Car: The Feasibility
The short answer to the question of trading in a car before it’s paid off is yes. Auto dealerships handle this scenario regularly and have streamlined the process to make it as straightforward as possible, often completing it within a single day if you already know the next car you want to buy.
Trading in your car at a dealership saves you the hassle of paying off the loan yourself and waiting for the title from your lender. The dealership will handle all the details, working directly with your lender to pay off the loan. If the trade-in offer is more than you owe on your loan, the remaining money will be applied towards the purchase of your next car. If the trade-in offer is less than what you owe, the remaining balance can be rolled into your financing contract for the new car.
Ensuring Your Current Loan is Paid Off
Ensure that the dealership has paid off your current loan within 10 days to avoid your lender thinking you’ve lapsed on your car payments. After the dealership receives the title to the vehicle, they’re free to do what they wish with the car, such as preparing it for resale or auctioning it off.
Determining How Much You Still Owe on Your Current Loan
Before considering trading in a car that isn’t yet paid off, it’s vital to know exactly how much you still owe on the loan. This information helps you compare the trade-in offer at a dealership with your remaining loan balance. Ideally, what you still owe would be less than the trade-in offers you receive, but it doesn’t always work out this way. This is a common situation that we’ll address later in this article.
Remember, just because a dealership makes it easy for you to trade in a car that isn’t yet paid off doesn’t mean it’s the best course of action. The right decision depends on various factors that need careful consideration. Trading in your car is a significant decision, and it’s essential to understand the financial implications fully. For more guidance on navigating auto trade-ins and loans, don’t hesitate to contact us at Toronto Car Loans.
