Free Car Buyers Advice .com
Find the Dealer in Your Area with the Lowest Price.
Your Subtitle text
Understanding LTV And How To Trade In My Used Car For A New Car.
Tips Trading In Used Cars For A Fare Value
Trading in a car can be a very stressful time. The thought of losing all the money and car payments you invested can be very hard to accept. When buying or trading in cars there are a few things we should all know. For every year or 12K miles a car is driven, on average its street value drops 10% from its original invoice price. For example a new sedan with an msrp of $21,895 has an invoice price around $19,995. With three years on the road or 36,000 miles its street value is 30% less. This would give it an aproxament street value of $14,000.
Street value is what an owner may pay for a used car. A car dealer on the other hand is not the owner or the party who will drive your car. There is another aproxament 20% less value between street value and trade in value. Street value is 30% less after three years or 36,000 miles, plus another 20% less should you trade in the car makes this trade in value around 50%.
Now understanding this lets cover another cruciall step in trading in a car. Unless we put a big down payment when you bought the car. Chances are more is owed than its trade in value. If the balance on the sedan after three years is still $14,000 and the trade in value is $10,000. The $4,000 is then added to your new car loan. This $4K over five years with interest is around $80 a month. Therefor if you are trading in your car to save on gas yet your new payment goes up by $80 it may make it irrelevant.
You could look for a car with a $4K rebate. The problem is cars with rebates over $3K usually are pricy trucks and suvs. The other option is considering buying your new car for a six year loan. If you extend a five year loan to a 6 year loan. You can add to your trade in negative balance and keep a comparable payment of a 5 year loan without the trade in.
Although consider at times low interest rates of 1,9% or 2.9% are only offered for five years. A 2.9%% loan for five years does have a similar payment of a 9% loan for six years. Therefor use caution when deciding to finance your negative balance from the trade in for a 6 year loan.
When trading in a car theres something that the banks look at. There is a term called LTV this means Loan To Value which refers to the balance of a loan compared to the value of the car. For example if a car is valued at $12,000 and the balance is $15,000 then its LTV is 125%. Max LTV is based on credit and the age of the car being purchased. For example a bank may not allow to finance 25% over the value of a four year old car.
If we already have a negative trade in value or are upside down as car dealers call it. The only way to lower a payment is to add our negative balance to a lower priced car. The problem is cheap cars usually have aged and banks will not want to finance to much over 100% LTV. On average a bank will finance up to 125% over the value of a car that is new or no older than two years old. Understanding where you stand and what type of car you need, will keep you in control. Also with this information you will show the salesmen that you are unlike other car buyers. This will seperate you from the norm and will give you the intimidation you need to stop a salesmen from taking control.
Trading in a car can be a very stressful time. The thought of losing all the money and car payments you invested can be very hard to accept. When buying or trading in cars there are a few things we should all know. For every year or 12K miles a car is driven, on average its street value drops 10% from its original invoice price. For example a new sedan with an msrp of $21,895 has an invoice price around $19,995. With three years on the road or 36,000 miles its street value is 30% less. This would give it an aproxament street value of $14,000.
Street value is what an owner may pay for a used car. A car dealer on the other hand is not the owner or the party who will drive your car. There is another aproxament 20% less value between street value and trade in value. Street value is 30% less after three years or 36,000 miles, plus another 20% less should you trade in the car makes this trade in value around 50%.
Now understanding this lets cover another cruciall step in trading in a car. Unless we put a big down payment when you bought the car. Chances are more is owed than its trade in value. If the balance on the sedan after three years is still $14,000 and the trade in value is $10,000. The $4,000 is then added to your new car loan. This $4K over five years with interest is around $80 a month. Therefor if you are trading in your car to save on gas yet your new payment goes up by $80 it may make it irrelevant.
You could look for a car with a $4K rebate. The problem is cars with rebates over $3K usually are pricy trucks and suvs. The other option is considering buying your new car for a six year loan. If you extend a five year loan to a 6 year loan. You can add to your trade in negative balance and keep a comparable payment of a 5 year loan without the trade in.
Although consider at times low interest rates of 1,9% or 2.9% are only offered for five years. A 2.9%% loan for five years does have a similar payment of a 9% loan for six years. Therefor use caution when deciding to finance your negative balance from the trade in for a 6 year loan.
When trading in a car theres something that the banks look at. There is a term called LTV this means Loan To Value which refers to the balance of a loan compared to the value of the car. For example if a car is valued at $12,000 and the balance is $15,000 then its LTV is 125%. Max LTV is based on credit and the age of the car being purchased. For example a bank may not allow to finance 25% over the value of a four year old car.
If we already have a negative trade in value or are upside down as car dealers call it. The only way to lower a payment is to add our negative balance to a lower priced car. The problem is cheap cars usually have aged and banks will not want to finance to much over 100% LTV. On average a bank will finance up to 125% over the value of a car that is new or no older than two years old. Understanding where you stand and what type of car you need, will keep you in control. Also with this information you will show the salesmen that you are unlike other car buyers. This will seperate you from the norm and will give you the intimidation you need to stop a salesmen from taking control.
CUSTOM SEARCH KELLEY BLUE BOOK VALUES AND TRADE IN VALUES
Custom Search