1. Repossession: Stop or Postpone: Contact your lender immediately and explain that you are considering trading in the vehicle. There are instances when lenders accept to stop the repossession when they know the car is going for a trade-in. Inquire if you can make some payments for the car while you are looking for a dealer to trade it in.
2. Dealer’s Policy: Each dealer has its own policies regarding taking car trade-ins, so it's important to check with potential dealers to understand their requirements and procedures. Some dealers may require that the car be in your possession and operable, while others may not.
3. Loan Status: If you still owe money on your car, it will most likely be considered a "lien." You will need to pay off the loan amount in full before trading the car in. Otherwise, the dealer would need to work directly with your lender to facilitate the trade-in and pay off the remaining balance.
4. Negative Equity: If the amount of money you owe on your car exceeds its market value, it is said to have negative equity. In this situation, you may need to pay the lender the difference between the outstanding loan balance and the trade-in value. This can potentially prevent your car from being repossessed.
5. Trade-in Value: The value of your trade-in car will depend on its condition, mileage, and other factors. Dealerships will typically assess the car and provide you with a trade-in value based on their evaluation.
Before making a decision, compare the trade-in value with any potential redemption or reinstatement fees associated with preventing the repossession. If the trade-in value is less than the amount you would need to pay to prevent the repossession, it may not make financial sense to trade-in the car.
Remember that trading-in a car before repossession can have implications on your credit and your ability to obtain credit in the future. It's important to weigh your options carefully and consider seeking advice from a financial professional or legal expert if needed.
