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Trading In a Car With High Negative Equity

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These days, it seems like things lose their value more quickly than ever, especially expensive ones like cars. When you need to trade in your vehicle but have high negative equity, you may feel like you’re up against a brick wall. Fear not! This situation is more common than you might think, and there’s more than one way to get out of an auto loan with high negative equity.

Having Negative Equity Is Common

Trading In a Car With High Negative EquityNegative equity – also known as being upside down or underwater – happens when you owe more on your car loan than the vehicle is worth. This happens most often at the beginning of an auto loan, especially if you’re financing a brand-new car. On average, new vehicles lose around 20% of their value in the first year of ownership.

If you start off with high negative equity, it can sometimes be difficult to close the gap between the value of the car and the loan balance by the time you’re ready to trade in your vehicle. For this reason, it’s common for many lenders to allow you to “roll over” your negative equity into your next loan.

Rolling over your negative equity simply means a lender lets you get another car now, while they add the remaining balance of your existing loan (which they pay off) to the new loan. This makes your new loan more expensive, which means you’re paying more in interest charges, and possibly seeing a higher monthly payment amount, even if you stretch your loan term out (which isn’t recommended with bad credit).

Not all lenders are willing to roll over someone’s negative equity, but plenty do. Even though you may be able to accomplish a trade in with high negative equity, it’s not the most affordable, or wisest, option, especially if you have bad credit.

Determining Your Equity Amount

Before we discuss the alternatives to rolling over your negative equity, you should make sure that you know the current estimated value of your vehicle, and how much you owe your lender. The less negative equity you have, the better off you are.

In order to see how much negative equity you have, you should first contact your lender, or sign in to your auto loan account, and get a 10-day payoff quote. This amount gives you the remaining balance on your loan with 10 days of interest included. Next, get an estimated value of your car by visiting an online valuation site such as Kelley Blue Book or NADAguides.

These sites give you an estimate of value based on information you enter, so be honest in your answers. If you underestimate the mileage or damages to your vehicle, the dealer may give you a much lower offer than the estimate.

Dealing With High Negative Equity

If you find out that you do have a high amount of negative equity, a smart option is to reduce the amount of negative equity in your car before you trade in your vehicle.

Each payment you make can put you closer to an equity position. To really gain momentum, you should make the biggest payments you can, as often as you can. Most auto loans today are simple interest loans, which typically means there’s no penalty for early loan repayment, but read over your contract details to be sure.

When making extra payments isn’t an option, you could opt to pay off the difference between your car’s actual cash value and the amount you owe. When you go this route, you’re still trading in your vehicle to a new lender, but they’re only going to pay your current lender the car’s value, and you’re responsible for paying the rest. This doesn’t help you out in any way financially, but it allows you to get out of your current loan.

If another vehicle isn’t a dire emergency, waiting it out is always an option, since each payment automatically reduces the amount of negative equity your car is carrying. When you’ve made enough payment to break even, or have equity in the vehicle, then you can think about trading it in.

If Rollover Is Your Only Option

Trading in a car with high negative equity may be your only option if you need another vehicle right now and can’t wait to gain an equity position. Since rolling over your negative equity is going to increase your new loan balance, we have a few tips for getting off the trade-in treadmill before you find yourself stuck with more negative equity than you can handle.

If you’re rolling over a negative equity auto loan be sure to:

  1. Make the biggest down payment you can – This way, you’re borrowing less and there’s less money to be charged interest on, which saves you money over the term of your loan.
  2. Take out the shortest loan term possible – If you find yourself stretching your loan term to seven or eight years just to get an affordable payment, you may want to reconsider. The longer you take to pay off a loan, the more it costs you in the long run.
  3. Opt for an affordable car – If you can comfortably afford your auto loan, that’s good! Don’t fall into the trap of getting a more expensive vehicle just because you can. If there’s no reason to upgrade you should wait, as it isn’t the time to get your dream car if you have poor credit.
  4. Choose a vehicle that holds its value – Different cars depreciate at different rates. Certain makes and models are known for hanging onto their value longer than others, which can give you a better chance at closing the equity gap.

Ready to Trade In to Your Next Auto Loan?

Now that you know it’s both possible and common to roll over the high negative equity on your car loan when you’re looking for a vehicle, it’s time to find a place to take your trade-in.

When you’re struggling with credit challenges, you need to be sure to work with the right type of lender that can help you. Working with a subprime lender through a special finance dealership can often be a good option for people who need a bad credit auto loan, and Auto Credit Express can help you find one near you.

We’ve cultivated a network of dealers around the country that are signed up with the lenders you’re looking for. To get started, fill out our free and easy car loan request form. After you do, we’ll get to work finding a local dealership for you to trade in your car!

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Warner Robins GA Credit Repair Finance Score Improvement Service Launched

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New credit repair services have been launched by the expert team at Fresh Start Consumer Services. They work with clients in Warner Robins, GA and the surrounding areas.

New credit repair services have been launched by the expert team at Fresh Start Consumer Services. They work with clients in Warner Robins, GA and the surrounding areas.

Fresh Start Consumer Services has launched a new credit repair service for clients looking to improve their financial future. Interested parties can sign up for credit consultations, in-depth credit analysis, credit recommendations and more.

Full details can be found at: https://freshstartconsumerservices.com/index.html

The newly launched services are designed to ensure clients can repair bad financial credit history, track their improvement campaign in measurable ways, and secure a better future for themselves and their family.

Clients can work with Fresh Start Consumer Services to clean up their past. This is achieved by working with the major credit bureaus and creditors to challenge the negative report items that affect the credit score.

Based in Warner Robins, GA, the expert team at Fresh Start Consumer Services is passionate about helping citizens to improve their credit score to give them more buying power. As a result of this, clients are able to secure more options in life.

The team understands that sometimes bad things happen to good people, and their services are designed to ensure that clients can get the most out of life. They also realize that a bad credit score can harm clients’ quality of life – and can be a difficult situation to get out of.

Fresh Start Consumer Services offer courses in credit repair and restoration, budget management, credit education and purchase assistance. Clients get easy access to their account 24/7 for live status updates on improvements, allowing them to fine-tune the management of their credit score.

Service options include personalized dispute options to fit each clients’ exact credit repair needs, an experienced case analyst and case advisor working personally with them throughout the process, custom dispute letters, and more.

For clients, there are a number of reasons to work with a credit repair specialist. Clients are able to secure significant savings on interest rates, attain better terms on loan products, and get access to the best credit card deals. They also gain access to more housing options.

The team states: “Fresh Start Consumer Services offers a unique combination of services that gives our clients the quality of life they deserve. We specialize in helping our clients achieve qualifying credit and the financial health they desire.”

Full details can be found on the URL above.

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Is it Possible to Trade In a Car Early?

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Yes, early trade-ins are possible when you finance a vehicle. In fact, there’s no set time frame on trading in a car. Most dealers won’t take a trade-in that’s too fresh, though, and it’s best to wait until there’s equity in your vehicle before you try to trade it in.

What’s a Trade-In?

When you trade in a car, you’re essentially selling it to a dealership and financing something else from their lot, without the hassle of selling and buying with separate transactions. There are no hard-and-fast rules about how and where you have to trade in your vehicle.

However, it’s beneficial to shop around and see which dealers can give you the best price, but you shouldn’t just head to a car lot and ask what they’re willing to offer you. When the time comes, there are several steps you may want to take to get ready for the trade-in process, especially if you’re looking to trade in early before you’ve had the chance to close the equity gap.

Trading In Early and Equity

Are Early Trade-Ins Possible When You Finance a Car?When you’re trading in a vehicle soon after you’ve financed it, you’re more likely to be in a negative equity position – owing more on your auto loan than the car is worth.

This is especially true if you financed a new vehicle, or a certified pre-owned car. Newer vehicles depreciate faster than used ones, which have typically already seen their biggest drop in value.

Depreciation is the loss of value over time and it can’t be stopped. It can be slowed, though. The best way to do this is by using a large down payment when you finance. This reduces the amount you have to borrow, and leaves you owing a price closer to what the car might cost after you drive it off the lot. New vehicles typically lose around 10% of their value as soon as they touch the road.

If you don’t have the equity to recoup your investment in a car, you have to make up that difference out of your own pocket. It’s much easier to trade in a vehicle that can pay for itself, but this isn’t always possible when you’re trying to do so early.

Preparing Your Early Trade-In

When you know that you’re starting with a deficit on your trade-in, it’s a good idea to be prepared to get the most you can. Clean the car thoroughly, both inside and out, and make sure to fix any minor damage that may have occurred in the short time since you took out your loan.

Getting the vehicle detailed and fixing major mechanical issues isn’t likely to result in a worthwhile increase to the cash in your pocket, so don’t go overboard. Remember, you want to make as much money on this trade as you can, and it’s probably cheaper for the dealership to fix any large issues.

Before you set foot in a dealer to get your trade-in appraised, it’s a good idea to know approximately how much your car is worth. You can find this out by going to online valuation sites such as Kelley Blue Book or NADAguides. Be sure to be honest when you’re inputting information, since it’s the only way to get an accurate estimate of possible value.

Shopping for Trade-In Values

Once you have the estimates (which you should print or save to your phone), it’s time to take your trade-in to get looked at. Taking it to a few different dealerships is a good way to find the best deal you can.

We recommend taking your early trade-in to at least three different dealers, making sure at least one of them is a franchised dealership that sells your vehicle’s brand. A franchised dealer that sells your car’s brand may be more likely to offer a higher price.

Depending on your credit situation, it’s likely a good idea to ensure you’re trying to trade in your vehicle to a dealership that can work with your situation, especially if you have poor credit. And that’s where Auto Credit Express can come in handy.

We have a nationwide network of special finance dealers that are signed up with subprime lenders who can help people in many different types of credit situations, including bad credit, no credit, and even bankruptcy.

The process is easy to get started – just fill out our free auto loan request form. We’ll match you to a local dealership that can get you started on the financing you need after your early trade-in.

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Jackson receives financial reporting award

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JACKSON, Mich. (WILX) – The City of Jackson is getting international recognition for its transparency in financial reporting.

The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to Jackson for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2019.

The CAFR was judged by an impartial panel to meet the high standards of the program. Standards include demonstrating a constructive “spirit of full disclosure” to clearly communicate the financial story of the City and encourage users and groups to read the CAFR. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting.

“This is great for the City as a whole because it improves our bond rating,” said City Manager Jonathan Greene. “We believe this award will help our residents understand the work we do to make the City’s finances transparent and easy to understand.”

Bond Ratings are letter grades assigned to bonds that indicates good or bad credit for an entity like the City of Jackson. By having a strong bond rating cities are granted opportunities to pay back interest at lower rates.

The CAFR can be viewed HERE.

Copyright 2020 WILX. All rights reserved.

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