Many people who are searching for a new vehicle wish to trade in their current one. The benefits allow the value of your trade-in to be used towards the purchase of a new car. At the Glockner Family of Dealerships, our friendly sales professionals guide you through the process every step of the way. Knowing a few important terms can help you have more confidence in your decision. Here are a few common questions about car terms answered by our experts. 

1. What Is A Trade-In Value? 

Trade-in value is the amount of money a dealership is willing to provide for your used vehicle. Using a reputable estimator, such as Kelley Blue Book, allows the offer to be fair. Of course, various factors will affect the trade-in value, such as the car's age, mileage, condition, or how popular a specific model is. If you like getting a new car every few years, trading your current vehicle in can be an excellent idea.

2. What Is A Down Payment? 

Even if you're trading in a vehicle, you may wish to put a down payment towards purchasing a new car. A down payment is funds set upfront by the buyer, which will ultimately reduce your borrowing amount. Also, it can help reduce a monthly payment that can make it easier to integrate with your budget.

3. What Is An Annual Percentage Rate?

The annual percentage rate, or commonly called APR, is the interest rate applied to your loan. Typically, you can earn a better APR with a better credit history or having a larger down payment. The term of your loan is how long you should expect to make payments on the vehicle, typically averaging between 60 and 84 months.

4. What Is Loan Value? 

Once you're ready to get to the point of financing a vehicle, the lender will determine the amount they wish to provide for your loan. Again, these values are determined mostly by your credit score, your trade-in value, and the amount you already invested with a down payment. 

5. What Is An Extended Warranty? 

When you purchase a new car, it comes with a manufacturer warranty. Extended warranties are an option to extend coverage beyond the standard coverage. These coverages can also be helpful if you're trading in for a used vehicle with more mileage.

6. What Is Gap Insurance? 

One of the aspects of buying a new vehicle that you should think about is the rate of depreciation. Gap insurance can protect your bottom line should the car get totaled or stolen. Take the following scenario into consideration: Let's say you have a vehicle that you currently owe $20,000 on, but unfortunately, it was totaled in an accident. After you file a claim, your insurance company values the vehicle to be worth $16,000. That leaves $4,000 to pay out of your pocket. It can be beneficial if you're buying a new car.

7. What Is A Lease?

A lease can be viewed as a car rental for an extended time. While you don't technically own the car, you agree to monthly payments for the portion of the lease. Most commonly, these terms range from 24-36 months. Leases do come with mileage restrictions, but they can be good if you have moderate to lower traveling requirements. At the end of your lease, you have the option for a new one, or you can purchase the vehicle.

8. What Is Equity? 

You might be wondering how to gauge the value of your used vehicle you plan to trade in, and this number is referred to as equity. If you are still making payments on your trade-in, the price is determined by two factors. You'll take the amount of money you still owe on a current loan and subtract it from the fair market value of the car. The less money you owe on an existing loan and the better condition of the vehicle will increase your equity.

9. What Is MSRP?  

MSRP, which means the manufacturer's suggested retail price, is the value the maker lists for their vehicle. It is the "base" value, meaning without enhancements or upgrades.

Call Glockner Family Of Dealerships For Any Questions

There's a lot to know when you're getting ready to trade in your vehicle for a newer car. You should never have to complete this process by yourself. We stand behind our commitment to every customer, and we're always available to answer any questions you have about trading in your vehicle. We look forward to helping you get what you need when it's time for a new car.


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