When you are buying a new car, your old one has two options. You can either sell it off or trade it in. The question is what happens to the car loan if you have not paid it off. You may want a new car because you’re tired of your old one, you have new transportation needs or you want to give your freshly graduated child a new car. No matter the reason, you still have to deal with the debt.

Trading-in Your Car

Trading-in your car is a good idea simply because you are building a relationship with your dealership. It is a fantastic way to get the best price for your new car. You will be granted concessions on the car and any accessories you buy. Your relationship with the car dealership grows as the number of financial transactions increases.

The Vehicle Debt

The main concern for a dealership when trading in a used car is the debt amount it is under. He will ask you what the pay off value is. If you have no idea, get in touch with your lender agency and find out. Depending on the pay off and the trade in value, the dealership will make a decision.

If your pay off is lower than the trade-in value of your vehicle, it is a fairly simple decision. You have money to pay off the remaining debt. You will be able to clear off your debt and still have some money for your new car. However, what if the debt pay-off remaining is higher than the trade-in value of the car?

Trading in While Upside Down

If the auto loan debt is more that the trade-in value of the car, it is known as an upside down on your car loan. This can have negative effects on your decision to trade in your car and get a new vehicle. In such a situation, you have two options:

1. Pay the Remaining Debt

You can pay the balanced debt after trading in your car. If you do not have the sufficient funds, you can consider borrowing money and paying for it. This move will completely rid the old auto loan debt off your hands.

2. Carry it Forward

The other option is to carry forward the balanced debt onto your next car loan. However, this should not be done lightly, especially, if you don’t have good credit. Your lender will subject you to a high interest rate.

What Insta Auto Loan Thinks

The primary aim of trading in your old car for a new one is to get a good value, good price and save some money. If it looks like the debt is going to carry forward and you don’t have sufficient funds to pay it off, we understand. We are willing to be accommodating and find a payment option and rate that suits your needs.

There is no point of opting for a trade in if you are unable to get a good value out of the deal. Insta Auto Loan ensures you get that good value!