Overview
Trading in your vehicle at a buy here pay here (BHPH) dealership can help offset the costs of financing a new one and potentially lower payments overall.
Here’s an overview of how you can trade-in your used car at a BHPH dealership:
Research BHPH Dealerships in Your Area: Begin your research for dealerships accepting trade-ins near you that accept them and offer vehicles that interest you with advantageous trade-in policies.
Contacting the Dealership: It is advisable to inquire at each BHPH dealership you are considering about their trade-in process, any requirements or documentation they require from you in order to evaluate your trade-in vehicle, and any specific requirements or documentation they require in order to evaluate it properly.
Assess Your Used Vehicle: Before heading into the dealership, conduct an appraisal on your used car by gathering as much relevant information as possible about its make, model, year and mileage as well as any special features or recent repairs that might affect its value and give an idea of its true market price. This can assist with negotiations when visiting dealerships.
Visit BHPH: To register or sell your used vehicle at BHPH dealership, arrange an appointment or simply visit with all necessary documents in hand, such as title, registration and maintenance records.
Trade-In Appraisal: At the dealership, your used vehicle will be appraised to establish its trade-in value, taking into account factors like condition, mileage, market demand and overall value. This amount will then be deducted from the purchase price of any new vehicles you may be interested in purchasing.
Negotiation: Once satisfied with your trade-in offer, negotiations for your new vehicle may commence. Discuss terms, price and financing options available as well as whether your trade-in can be applied towards down payments or decreasing financing amounts.
Financing and Finalizing the Deal: If financing your new vehicle is an essential element of its purchase, present all relevant documents to the dealership for review and discussion of available financing options. Once accepted, finalize both trade-in and purchase of new vehicle to complete transaction.
Remember, trade-in policies and procedures vary between BHPH dealerships, so it is vital that you contact the one you intend to visit directly prior to visiting for specific instructions, requirements, and information on their trade-in policies and procedures.
What to consider?
When trading in a BHPH car, the process should generally follow that of any vehicle trade-in; however, there are a few key considerations you must keep in mind:
Ownership and Loan Balance: If you owe money on your BHPH car, if it still owes, and still owe a balance on its loan balance; this figure will impact its trade-in value and can even help determine its trade-in value with another dealership. Depending on their policy, some dealerships may settle this remaining loan balance by applying any equity to purchasing another vehicle; others may roll any remaining balance into new loan arrangements.
Trade-In Appraisal: At the dealership, your BHPH car will be appraised according to factors like condition, mileage, market value and demand for it. This value will then be subtracted from the price of any new vehicle that interests you.
Financing: When looking to finance your new vehicle through a BHPH dealership, trade-in values could be considered as down payments and could help lower the amount you owe over time. Keep in mind, however, that their financing terms differ significantly from traditional lenders; meet specific eligibility requirements before financing can be granted.
Importantly, BHPH dealerships specialize in offering financing to customers with poor or no credit, so their trade-in process and terms may differ significantly from traditional dealerships. It’s wise to contact any BHPH dealership you’re considering in advance to inquire about their policies and procedures regarding trade-in.
Types of equity at buy here pay here
“Equity” in buy here pay here (BHPH) car dealerships refers to any difference between the value of a vehicle that exceeds what is owed on its loan and what its market value actually is. This excess value may be used in various ways; here are a few types of equity found within buy here pay here cars:
Positive Equity: Positive equity occurs when the appraised value of a BHPH car exceeds its remaining loan balance, for instance if appraised value is $10k and loan balance $800 then this leaves $2,000 of positive equity that can be used as downpayment for new vehicle purchase or to lower amount financed on trade-in transactions.
Negative Equity: Negative equity, also referred to as being “upside down,” occurs when the loan balance for a BHPH car exceeds its appraised value. This typically happens if its value has depreciated faster than payments on its loan balance are being made off; dealing with negative equity can be complicated as trading in may leave you owing more than its worth owed back owing.
Equity Rollover: Some BHPH dealerships may allow you to leverage any positive equity from your trade-in into financing for a new car, potentially reducing loan amounts. For instance, if it has $2,000 of positive equity that the dealership can apply towards down payments and balance payments of the new vehicle thereby decreasing your loan payment amount.
Another option for using equity as a trade-in towards another vehicle is using your BHPH car as a trade-in against another. Your dealership will assess the trade-in value and deduct that amount from the cost of the new one you intend to buy; any positive equity can then be applied towards or used as down payments on that purchase.
Note that your options regarding equity in a BHPH car depend on both dealership policies and your financing agreement terms. Therefore, it’s wise to reach out directly to each dealership to understand how they handle equity situations and which opportunities exist for capitalizing any positive equity you may possess.