When you’re looking to sell your car, trading it in may offer a simple way to get this done without too much hassle. Instead of taking money out of your savings account to pay for the deposit, you can use your old car as a down payment. When it does become a hassle, is when you still owe on your car. Whether or not you have equity in your trade-in can make all the difference in the world.
The good news is that you can trade your car in even if you still owe on it.
The bad news is that in today’s market, many lending institutions tend to back off on trades with negative equity, so you need to be prepared to pay more.
You stand a better chance of approval if you trade your car in by adding more money to the down payment. The success of the trade-in is also going to depend on your current financial standing.
Keep in mind that interest rates on bad credit car loans are very high. So you’re paying a high interest rate on two cars, not just one. It helps if you have some cash to help offset the negative equity.
The value of the car depends on factors such as:
- How old the car is
- The condition the car is in
- The number of kilometres the car has on it
Because of your bad credit record, you will be considered to be a high risk individual. You should choose more affordable cars to increase your chances of qualifying, when you trade your car in. Lending institutions want to know that you are able to afford the monthly payments. If you have some cash you can use this to improve your chances of approval.