How Trade-Ins Affect Your Auto Loan
Buying a car is one of modern life’s big ticket items, no matter what kind of car you’re getting or how much the grand total comes to in the end. There’s just no getting around the fact that you’re going to be spending a significant amount of money. When buying a new car, many people trade in their old one at the same time, and apply the money from that trade-in sale towards the overall cost of their new car. So, if you’re on the market for a new car, and you’ll be trading in your old one, you will lower the amount of the cost of the new car. And that, in turn, will determine how much you need to borrow if you’re looking to get an auto loan.
Reducing Your Auto Loan
Auto loans can be reduced significantly by the money you get from trading in your old car. If your old car is worth $10,000, for example, and you are buying a brand-new Toyota Prius for $30,000, you are now looking at needing to borrow $20,000. That’s a lot of money shaved off your auto loan. And auto loans come with interest rates, of course, so by trading in your old car, you’re saving yourself all kinds of money by reducing the amount of your auto loan. An auto trade-in is also the easiest way to get rid of your old car, as well – the transaction’s all done with the same people at the same time.
Selling Your Car Privately
Of course, you may find that you want to sell your car privately instead of going the trade-in route. When you do that, you could get more money than a trade-in, and thus have more money to put towards the purchase of your new car, thereby lowering the cost of your auto loan.
Before you buy a new car, trade in your old one, and seek an auto loan, be sure to consult with a car financing specialist to get their professional advice on your personal situation.
