Advantages of Trading In Your Vehicle
When you buy a new or pre-owned vehicle at Ken Ganley Kia of Medina, OH, you have to decide what you’re going to do with your old one. You might think that you’ll get the most money if you sell it yourself. But you also want to consider trading in your car, which has the following advantages.
It may surprise you to discover that trading in your vehicle can put more money in your pocket over the long run when compared to selling to a third party. A trade-in reduces the cost of your purchase and the amount you have to finance. The result is lower monthly payments and total overall cost.
As an example, if you’re buying a $30,000 vehicle at an Annual Percentage Rate of 2.9 percent over 48 months:
- Having no trade-in puts your monthly installment at $662.70 for a total cost of #31,809.60.
- Adding a trade-in of 20% or $6,000 lessens your installment to $530.16 for a total of $25,447.68. You svae $6,361.92, which is more than the $6,000 value of your trade.
You can calculate the savings yourself using any combination of price, interest rate, term, and trade-in value through our handy Payment Calculator.
Selling a vehicle by yourself is a major hassle because you have to do the following to get the best price:
- Repair any major mechanical problems. Nobody is going to buy a car that doesn’t run well.
- Clean and detail both exterior and interior so it looks like new.
- Research the title to ensure that you are the sole owner and can transfer the ownership.
- Place an ad in the local paper or an online site. You’ll need to take pictures of your car for the ad.
- Field phone calls, emails, and texts from interested buyers and answer questions.
- Arrange a schedule for potential buyers to come to your home or other location to test drive the offering in person. Only a few will actually show up.
- Haggle over the price and accept payment, hoping that the check you receive won’t bounce.
- Fill out the back of the title accurately to release ownership. You also need to get the car title notarized, fill out an Odometer Disclousure Statement, take off the license plates, and give the buyer a lien release.
If you trade in your vehicle, all you have to do is bring it in, give us the keys, and drive off in your new car. We take care of everything else.
No Negative Equity
You probably know that a new car depreciates. Its value goes down by as much as 20 percent when you drive it off our facility and by another 10 percent after the first year, for a total depreciation of 30 percent in 12 months.
If you don’t account for this loss in value in the financing, you’ll have negative equity in the vehicle. You’ll owe more money on the loan than the purchase is worth. You won’t be able to sell the vehicle or recoup any losses if it is totaled in an accident: any compensation you receive will be less than what you have to pay off.
Having a trade-in can prevent negative equity if its value is equal to or greater than the expected depreciation. What you owe on the loan will be under the worth of the vehicle minus the trade-in.
Existing Loan Pay-Off
You can’t sell your vehicle if it is still being financed because you won’t have the title. Your lender technically owns the car and won’t transfer that privilege to you until you’ve paid off the loan. If you trade-in your car to us, we take care of paying off your obligations and taking title.
The only possible issue is if you have negative equity on the vehicle. In that case, you can pay off the old loan with cash or, we can fold in the old loan into the financing for your new purchase.
What to Do
If you’re interested in buying a car and want to trade in your old vehicle, give us a call at Ken Ganley Kia of Medina. We can answer any questions, estimate what your trade-in may be worth, and invite you down for a test drive.