Q: I currently have a car that I am paying off. I was looking into getting into a bigger car and want to give the car as a down. My question is how does it work when one hasn't finished paying the car off but want to give it as down for a new one?

A:Well it is called trading your car in. It is fairly simple they will give you trade in value for your car and then the amount you owe will be rolled over.

So if you were buying a $10K car and trading your car that was worth $4K then the difference would be $6K now lets say you owe $2K then you would be financing on the new loan $8K as you would have $2K in equity. Now there is always the possibility you will owe more than it is worth in which case that is considered negative equity but works the same way. buying a $10K Trade is worth $4K and you Owe $5K then you would be financing $11k plus tax tags and fees.

Most states when trading give a break on the tax so you only will pay tax on the difference amount.


Q:How long should I wait to refinance a car. I Bought it in November was wondering if there is a certain time I should wait to refinance it.

A:Well as far if you should refinance or not that all comes down to your interest rate, term etc. I would guess by you asking this question that you had a bit higher interest rate probably due to a couple of credit bumps or no credit history. So you are probably looking to really lower your rate.

Normally it takes at least 6 months before you can refinance. If your rate was a tad higher dues to not having established credit then you can start looking around the 6 month point as long as the situation is right with what you owe on the car vs what it is worth. If it was due to some bumps in your credit past than you will probably be looking at around a year as long as you do not have anymore credit problems and the previous problems were not extreme.

The factor of you establishing credit or repairing credit will come into play as well as what you owe vs what the car is worth. It will probably increase your chances if you have a little extra to put towards the refinance so save a bit. If you paid to much in the beginning for the car and have an extremely high interest rate it could be very hard to refinance.

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