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family in carTrading in a car to buy another vehicle seems like an attractive option for many people. Instead of coming up with a large down payment, trades can usually offset the balance of their new car. Dealerships base the trade cost on the value of their old car.

But, don't act without thoroughly considering the costs of trades. Only consider trading your car after examining the real costs of doing so.

Can You Afford the Extra Maintenance Costs?

When you buy a car, you agree to take on the maintenance of a new vehicle. Even if you purchase a car with a warranty, it won’t last forever.

To ensure you can afford the vehicle, make sure you compare the cost of maintenance for both vehicles. Determine the cost of new tires, an oil change, and your car insurance. Then, determine if trading in your car for a new car will fit in your budget. If the maintenance costs are too high, then maybe you should keep your vehicle.

Are You Upside Down in Your Vehicle Payments?

When you buy a car, it depreciates dramatically. It starts depreciating as soon as you drive it off the lot. Unfortunately, driving it for a few months lowers the value of your vehicle further.

With so many aspects decreasing the value of your car, it’s easy to find yourself upside down in your payments. Upside down means you owe more than your car is worth.

The impact of being upside is that you are still responsible for paying what you agreed to pay. This is regardless of what your car is worth. If you trade your car, many dealers roll the negative equity into your new loan, and this causes you to be upside down when it comes to your new loan too. It also causes your payments to be significantly higher. If you can’t afford the additional cost, then maybe you should delay purchasing a new vehicle.

Can You Get Another Auto Loan?

If you have an excellent credit rating, then getting a new auto loan with a good interest rate is possible. However, when you have less than perfect credit, then you may have to take on a loan that's more expensive than your current auto loan. A higher interest rate on the new loan could make the new vehicle less affordable than you thought. It could also jeopardize your ability to keep your new car. As such, you shouldn’t rush to trade your old car if a new loan isn’t guaranteed.

Before you head to the car dealership, weigh the costs of new auto insurance, maintenance, and loan costs before signing.

Get in touch with First Independent today. We can help you get the correct rates on auto insurance for any traded car. Go online now for a fast, free quote. Give us a call at (586) 247-2220 for more information.
Posted 5:26 PM

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