How to Trade in My Car Instead of Refinancing

If interest rates have gone down since your initial car loan, refinancing can save you money over the term of your loan, or lower your car payments if you extend your term. You can also trade in your vehicle toward another car to do the same. However, if you owe more money than your car is worth, you may have difficulty trading in without putting money down. Learn how to trade in your car instead of refinancing.

Instructions

1

Check your credit at AnnualCreditReport.com. This website allows you to receive one free credit report per year from each of the three major credit bureaus. If your interest rate was initially high because of past credit issues, make sure your report is accurate and up-to-date from the time you took out your last car loan. If your credit has gotten worse, you may find you cannot lower your payments or get a better interest rate for a new loan.

2

Go to a dealership you want to work with. Large dealerships offer more options for financing, so if you want to work with a dealer who can provide the best financing option, use a large dealer. If you are unsure of where to go, you can research new-car dealers online (who also sell used cars) by going to a manufacturer's website to input your zip code for a list of dealers near you.

3

State your intentions to your salesperson--let him know what you hope to accomplish by trading in your car for another. Your salesperson will probably ask to run your credit report, so let him do so to help you in terms of monthly payments and budget. Give you credit information to your salesperson and sign the credit application.

4

Go over your credit report with your salesperson. He will probably let you know if lowering your rate is an option after the credit review. Give your salesperson the keys to your current vehicle and the name of the bank you currently finance through so he can appraise your car and get the correct payoff amount.

5

Discuss money down and vehicle options. Once your salesperson knows what your car is worth for a trade-in and the correct payoff amount, he can let you know if you'll need to put money down toward your loan for approval or to reach your budget. If you do have a budget, look at cars in your price range rather than the entire inventory.

6

Work with your salesperson until you can find a car that you want to finance. Once you do, make arrangements to pick it up and sign the paperwork at the dealership, which can be the same day or at a later date, depending on the dealer. Let your salesperson set up your new insurance policy with you, which includes transferring coverage to the new car and having proof of insurance faxed to the dealership.

7

Bring your title with you, if possible (some states hold titles until a loan has been satisfied), at the time you pick up your car. Sign all bank contracts and motor vehicle paperwork at the dealership. The dealer will payoff the old loan; you can expect to make your new car payment in 30 to 45 days, depending on the bank you financed through.