If you are planning to trade in your current Car for a new one, then you should make sure all outstanding balance on the current Car is cleared off and that it does not cost you more than it should. Here are a few problems that occurs frequently and that could also be avoided, if you are good enough at some money and Loan management tactics.
I will elaborate this point for you with a simple example. I have a Car which still has a pending Loan of $1000 on itself. I see a new Car and I want to trade this one for that new one. The dealer trades the new Car with me for $500 but along with that he will add the leftover $500 to the new Car’s Loan and thus I end up with paying $500 for a Car which becomes my negative equity.
The Car may not be worth that $500 addition, but because I was in a hurry to get a new Car, even with Loan pending on the old one, I end up paying double the amount. Bad deal! Remember never to trade in a Car which already has a pending balance.
Know Market Value of Your Car
If you want trade in with a good price offer, it is imperative that you know the cost of your Car. Sometimes dealers want to get a low offer and if you don’t know the value of your current Car, you could end up loosing quite an amount over it. Check out websites, current Car ratings, its models, its price value online and you will at once be aware of the current market value.
Remember that when the dealer takes over your Car Loan, you still have to pay him the monthly amount. Keep track of this by getting bills, receipt of payments and keep them safe until the Loan balance is paid off. If you don’t keep knowledge of where your money is going, you could get defaults on your credit report, without even knowing about it. Always check after three days of posting the payment, whether it has been received or not.