People prefer (or need) a different size or type of vehicle for many different reasons, from family additions to changes in income. Say you’re interested in getting a new car, but you still haven’t paid off your old one. This is a common problem. Can you exchange your old car and upgrade to a new car before you’ve paid off the loan? And if so, how can you do it? We have some answers to help you understand how it’s done.
Yes, you can
In a word: yes. You can upgrade to a new car before you’ve paid off the loan for the current one. In fact, dealerships do this all the time for customers. It’s so common that you shouldn’t even expect a dealership to bat an eyelash when you announce that you still owe money on your current car. You certainly don’t need to go to the trouble of paying off your car loan to get complete ownership before you go shopping for a new model.
In fact, captive finance companies like Volkswagen Financial Services allow you to upgrade to a new Volkswagen group car with absolute ease with their ’Upgrade Option’. More so, exclusive finance solutions like Audi Choice also offer the option to Upgrade to a new Audi at the end of the 3 year loan tenure.
How to do it
So how does a dealer do it? Simple: Once you’ve exchanged your car, the dealership deals with your bank or financial institution in order to pay off the loan for you. The result is that you usually won’t even have to bother calling your bank to inform them you’re selling your car; instead, the dealership will do all the legwork. This is true to Volkswagen Financial Services as well, as it becomes your one point contact, since the car and finance both are from the Volkswagen Group!
Just because you’re upgrading to a new car in exchange for your previous one doesn’t mean you no longer owe any money on it. While you certainly don’t have to continue making payments on a car you no longer own, owners who are underwater* on a vehicle will find that the dealership has rolled over their negative equity# into the new car’s payment. For instance, if you owe Rs. 8,00,000 on your old car but it’s only worth Rs. 6,00,000, the dealer will add the extra 2,00,000 you owe to the purchase price of the car you’re buying. That money doesn’t simply vanish; instead, you’ll end up paying it as you pay off your new car. Vice-versa, if your car’s value is more than what you owe in loan amount, this is called positive equity^. You can apply the difference (extra) amount directly to the purchase of your next car!
The bottom line
Upgrading to a new car when you still haven’t paid off the loan isn’t a problem when you have equity in it. Volkswagen Financial Services will evaluate your current car, help you upgrade to a new car with simplicity and ease.
Regardless of whether or not you have a car to upgrade, Volkswagen Financial Services and its countrywide network of dealership make it hassle-free to own your new car!
*Underwater: A term used when one is in negative equity.
#Negative Equity: When your balance loan amount is higher than the value of your current car during upgrade.
^Positive Equity: When your current car’s value is higher than the balance loan amount during upgrade.