It’s quite common to see car owners trying to sell off their older cars when their loans haven’t been paid in full yet. However, if you are a dealer, your common sense might tell you not to buy a car whose loans haven’t been paid yet. But do you know that many dealerships that will pay off your trade no matter what you owe exist?
Yes, you heard this right! Some dealerships do so. But what’s the catch here? What are these dealerships hiding from you?
If you wish to learn more about auto dealership trade secrets, you have come to the right place. Read this post till the end to learn these secrets!
What Happens When The Dealer Pays Off Your Trade-In?
Car owners often look for dealerships that can pay off their loan amount in full when they trade. This becomes like a jail-free card since after you trade in the car, the loans are no longer your headache.
However, most dealerships nowadays are actually willing to take the car off your hands. They will say they will pay off your trade “no matter what” – a guarantee.
Therefore, if you are wondering whether it’s possible for dealerships that will pay off your trade no matter what you owe, you should rest easy but be weary at the same time.
When you go to a dealership to make a trade, they will check the following things regarding your vehicle:
- The condition of your car – bodywork, damages, paint job, tires, etc.
- They will check how much damage your car has received so far. They will do so by checking your accident history using your VIN Number. This number contains information like oiling changes, resurfacing of flywheels and brakes, alignment adjustments to the wheels, and more.
- Your financing documentation for the car. This must include your overall payments, payoff amount, dues, and more.
What Is Negative Equity?
When a car dealership says that it will trade in with bad credit, they take into consideration your negative equity. This will be added to the price for the new car.
To make it simpler for you, when you trade in your older vehicle for a newer one, you have to pay extra for the newer one.
For example, your old car costs $30,000. However, you took a loan of $33,000 to buy it, which still remains unpaid. Now, you have decided to trade the old car for a new one that costs $35,000.
Therefore, by all calculations, you will have to pay $35,000 extra for the new car. However, your old car still had a $33,000 loan left, where the extra $3,000 is the interest.
Dealerships refer to this overall amount as negative equity. When you buy a new car, instead of $35,000, you have to pay $3,000 extra as well. Therefore, when trading in your old car for a new one, you must pay $38,000.
When the dealership gets the money, they will pay off your old loan before giving you the registration certifications for your new car. Here, when you make the trade, the negative equity from the previous loan gets carried forward to the new one. This equation of carry-forwarding negative equity is known as rolling over negative equity.
How To Deal With Negative Equity?
If you think having negative equity isn’t a bad thing. In fact, many car owners end up with negative equity after they trade off their car for a new one. This is more common if you recently traded off a new car that had loans with higher interest rates.
Additionally, paying less down payment and having a long-term loan can also cause your negative to rise. Therefore, whichever way you look at it, rolling over negative equity should be your last resort.
Therefore, to lower the amount of negative equity you have, or even completely get rid of it, here’s what you can do:
- First, try to pay off whatever negative equity that remains before buying a new car.
- You can make additional payments so that you can cover up the real value of the car in the fastest way possible.
- While not recommended, you can try waiting for the value of the loan to be the exact same as the value of your car.
How To Find Dealerships That Will Pay Off Your Trade Near Me
There are various dealerships that will pay off your trade no matter what you owe. However, many of them will actually try to scam you and swindle off your money. Therefore, finding the correct dealer for such a situation is super important.
The best way to find genuine dealers that will trade in with bad credit are:
1. Consult With Better Business Bureau (BBB)
The BBB (Better Business Bureau) is a website from where you can check the authenticity of the business. Every registered business in the country can be checked out ay BBB. Plus, you get lots of customer reviews here, which always help you better understand the authenticity of the dealer!
2. Read Customer Review Online
There are many online websites from where you can check customer reviews online. Some of the most popular sites like this are Yelp, BBB, Google, and TrustPilot. Therefore, check what customers have to say about certain dealerships before going to them.
3. Ask Friends And Family Members
Asking friends and family members is the best way to get authentic information. This is because they will never dupe you.
Best Dealerships That Pay Off Negative Equity On Trade
Here are some various dealerships that will pay off your trade no matter what you owe:
- Berkshire Hathaway Automotive
- The Imperial Car Company
- Sonic Automotive
It’s difficult to locate dealerships that will pay off your trade no matter what you owe on the car. This is because many dealers will try to dupe you, taking advantage of any negative equity that you might have accrued. Therefore, it’s best to consult your family and friends, Better Bureau Organization (BBB), and customer review websites (like Yelp and TrustPilot) before you decide on one dealership to get your car traded for a new one.
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