If you are going to buy a car there is one aspect of yourself that you have to be sure of and that is your credit score. Once you have gone and had your credit score checked (or if you already know) and realize that you do not have the best of credit then you will want to start exploring the different possible options. One that you may think of is using negative equity for bad credit used car loans. Trading in your vehicle is a very common option among car buyers, but if you have bad credit it may end up being more difficult than you initially expect. It is very possible that it could end up sabotaging everything.
Very few lenders will let you do this, and it becomes a rough financial situation because you are still paying off your old vehicle while still paying on your new vehicle. This can make interest rates and payments an ugly sight. This means that it truly should only be used in emergency situations.
The situation in which it should be used will be one of the examples where you are appraised for more than what you owe or if you have already paid off your vehicle. Those are the best situations where you should trade in your vehicle. If you want to get approved for financing we can help you out in getting approved under those circumstances. We have years of experience in helping those in difficult credit situations get exactly what they need. If you do have negative trade though it is best to just finish paying off your vehicle and then use it as a trade in.
Find your Worth
You will first want to figure out what your car is worth. It will be inspected by the dealer and depending on different factors such as age, condition, and mileage you will get an estimate. Now if you have been doing research it may come out lower than expected because of certain conditions and while the possible resources are great it should only be a rough estimate guide and the final decision is truly up to the dealer.Determining Trade Equity
The next step is determining the trade equity on your vehicle. What this means is how much worth the car has versus how much is still owed on the vehicle. As long as it is paid off completely whatever the appraisal amount was will stand for the trade. If the appraisal is greater than what is owed then the difference will be used. Then of course if the owed amount is greater than the value that is when you get negative trade equity.Getting a Loan with Negative Trade Equity
Now most subprime auto lenders are going to require that you have a down payment, but if you have negative trade equity that means you can not use a trade in as your down payment. It can be used as part, but there will be more that is required if you are hoping to receive financing. So you will end up putting a very large down payment on your vehicle.Very few lenders will let you do this, and it becomes a rough financial situation because you are still paying off your old vehicle while still paying on your new vehicle. This can make interest rates and payments an ugly sight. This means that it truly should only be used in emergency situations.
The situation in which it should be used will be one of the examples where you are appraised for more than what you owe or if you have already paid off your vehicle. Those are the best situations where you should trade in your vehicle. If you want to get approved for financing we can help you out in getting approved under those circumstances. We have years of experience in helping those in difficult credit situations get exactly what they need. If you do have negative trade though it is best to just finish paying off your vehicle and then use it as a trade in.