Can I Trade in My Car With Bad Credit?
Are you looking to get a new car but are stuck with bad credit? This is a common problem all across America, and you’re definitely not alone. If you’re looking to get a new car but aren’t sure how, keep reading. Find out how you can leverage a car trade-in to get the down payment you need for a brand-new vehicle, even if you have bad credit and even if your car isn’t paid off. Bad credit or not, there’s still a way for you to upgrade your vehicle today, and we’ll tell you how.
Can I Trade in My Car With Bad Credit?
If you’re suffering from bad credit, it can be a real struggle to get a loan or to get approved for a new car purchase from most car dealerships. Your credit score reflects the last seven years of your credit history and includes unpaid bills, balance transfers from month to month, and other not-so-favorable financial decisions. This can have a huge impact on your impact to borrow money today — including for a new car. But that doesn’t mean you’re at the end of the line. There’s still a way you can secure yourself a new car, despite your poor credit rating and credit history.
Trading in your old vehicle can help you bypass the poor credit rating by providing the dealer with the required down payment. If you can pay the down payment, you can then be accepted for the loan on the new vehicle.
Can You Trade in a Car With a Loan on It?
A negative equity trade-in refers to a vehicle that’s either still being paid for or is so old that it no longer has any value. A negative equity vehicle cannot be used as a trade-in unless the value of the equity in the car is balanced out. This means the debt must be paid off one way or another, or you must present the dealer with the cash equivalent to cover the down-payment requirement. Either way, the negative equity must be paid off by the buyer before the down payment can be accepted and the loan approved.
How Car Trade-Ins Work With Bad Credit and Negative Equity
If your car is paid off and has value, then you can trade it in and it can act as the down payment you need to secure yourself a new car. If the car has what is referred to as negative equity — meaning you owe more money on it than the market value of the vehicle — it can be a little tougher to secure a loan, but it’s not impossible. You’ll have to cover the difference between the equity and the amount owed to be able to complete the transaction.
The first step to leveraging a car as a trade-in is to get it evaluated so you can estimate what it’s worth to a car dealer. You can use the value of that trade-in to cover the minimum down payment and get yourself approved for the remainder of the loan. If the car has no equity in it, the only way to turn the vehicle into a valuable trade-in is to pay off your loan so the car can then be used as a trade-in. If you can’t afford to pay off your loan immediately, you could make an extra payment per month to accelerate the process.
Why Do I Need a Down Payment?
Most car dealerships work together with subprime lenders when it comes to customers with poor credit. A subprime lender requires a buyer to come up with a down payment of a certain percentage of the total of the vehicle in order to qualify for the loan. Unfortunately, this is a pretty standard part of the car loan approval process across the board. To get approval, you will need to supply the down payment in cash or provide a trade-in of value that the car dealership can sell to recoup the money.
How Can Car Payments Build Credit?
If you have poor credit, you may already know that not making your payments is a contributing factor to your credit score. By the same token, paying your car loan on time every month will help rebuild your credit. Making payments in full and on time slowly improves your credit score each month. Continue to make your payment on your new vehicle, and you’ll be well on your way to repairing your credit score.
Can I Get a Traditional Personal Loan Instead?
If you have bad credit, you’re unlikely to secure a personal loan from a traditional banking institution. The bank’s criteria for loan approval would make you too much of a risk on their books, and you would most likely be denied. If this is your situation, a trade-in in exchange for a down payment on a new vehicle directly from a car dealership may be the only option you have if you need to upgrade your vehicle.
Why Should I Choose Akron Auto Mall?
If you’re looking for a car and you happen to have bad credit, you know that finding a dealership that treats you right is hard to come by. At Akron Auto Mall, we can help you get an instant evaluation of your vehicle right on our website. This can help you determine your budget for a new car. We understand that your past can’t be changed. What’s done is done. But there’s no reason why you shouldn’t get a second chance to get your life and your finances back on track.
We work with clients who suffer from bad credit, and we help them find solutions that are mutually beneficial. You need a safe and reliable vehicle to continue to go out and earn your living so you can pay your bills and continue to live your life. We can help — even if your past credit history isn’t great! Feel free to read more right here about how we evaluate trade-ins, our process, and other frequently asked questions.