Can You Trade-In a Car That Isn't Paid Off?
Can You Trade-In a Car That Isn't Paid Off?
Posted on February 19, 2023
The question of trading in a car that isn't paid off was put to our Puslinch car loan team last week. It’s another common question we hear so thought it would make a good blog post.
The short answer is yes you can trade a car in with outstanding finance as long as it is settled at the time. That can be with a new car loan or with any profit or cash you might have.
There is a process for it though.
Get Your Settlement Figure
Before you trade-in, you should find out how much it would cost to settle your car loan. This will help you decide whether to proceed with the process or not. If the settlement figure is too high, you may be better off sticking it out for another year or two.
If it’s a reasonable amount that would work with your figures, you can proceed.
Get a Trade-In Value
Next, you should get a trade-in value for your car. Use car classifieds or auto sales websites to get an idea of what your make and model sells for. Pay attention to trim and optional extras and compare like for like as much as possible as it can have quite the effect on value.
If in doubt, use Canadian Black Book. It’s a reliable source of car values and is used by the auto trade as well as the public.
Remember though, these values are just a guide. Used car values fluctuate depending on demand, time of year and how busy the dealership is.
Find a Great Car
Now comes the fun part. Finding a car to replace your old one. Bear in mind your budget, any future car loan and the trade in value and settlement figure. Stick to your budget and find the car you’re looking for.
Our Puslinch car loan team can help source a car as well as secure finance for it!
Work With The Dealership
The dealership will take your car’s value and take off the settlement figure for your loan and then take that off the cost of the new car. The difference will then need to be made up with cash, a car loan, or a combination of the two.
If you’re getting a car loan through the dealership, they will settle your car loan during the process.
Make sure the contract stipulates that the existing finance will be settled by the dealership as part of the purchase. It has been known for dealers to promise to settle the loan only for owners to receive a call a month later asking for the loan payment.
Even though the dealership handles the process, it’s still your responsibility until paid off. Keep an eye on the process and don’t cancel the automatic payment until you are sure or have been notified by the lender.
When you’re ready for a car loan, get in touch with the Puslinch car loan experts at Northway Ford for great deals on auto finance.
Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles!