‘Money: It's Personal' — Rolling over your existing auto loan
SAN ANTONIO – It may be tempting to trade in your slightly used vehicle for the next shiny, new car on your wish list. But if you still owe money on your current auto loan, there are some steps you need to take before rolling over the loan on your new ride.
The Consumer Financial Protection Bureau said you'll want to find out how much you owe on your current loan. You should ask your lender for your payoff amount. This may be a different amount than what you see on your statement because your payoff amount may include a prepayment penalty or because of the way your interest is calculated.
The CFPB says you'll want to research the trade-in value of your vehicle so you can know if the amount you still owe is less than its value.
You can then decide if you want to pay off your existing loan before purchasing a new vehicle, wait until you pay off what you owe or include the amount you still owe in your new auto loan.
If you owe more on your current vehicle than it is worth and you decide to roll over the existing balance onto your new loan, it could make your payments much more expensive. You should also factor in costs for things such as taxes, gap insurance, maintenance plans or any other charges required or that you may want to add.
For more tips from the CFPB about rolling over your existing auto loan, click here.
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