Trading In a Drivetime Car for a New Vehicle: Your Options

Quick answer

• You can likely trade in a Drivetime car, but your options may be limited by Drivetime’s specific policies and the vehicle’s equity.
• Understand your car’s actual market value versus what Drivetime says it’s worth.
• Explore financing options before you visit a dealership to compare offers.
• Be prepared for a potentially lower trade-in value if Drivetime financed your current vehicle.
• Consider selling the car privately for potentially more money, though this requires more effort.
• Know your credit score, as it significantly impacts financing terms for your next vehicle.

Who this is for

• Individuals who currently own a vehicle financed through Drivetime and are looking to upgrade or replace it.
• Those who are curious about the process and potential challenges of trading in a Drivetime car.
• Buyers who want to understand their financial position and explore the best path forward for their next vehicle purchase.

What to check first (before you act)

Goal and timeline

What do you want to achieve with your next vehicle, and when do you need it? Are you looking for a similar payment, a lower payment, or a different type of vehicle? Having a clear goal will help you evaluate your options.

Current cash flow

Analyze your monthly income and expenses. How much can you comfortably afford for a new car payment, insurance, and maintenance? Understanding your budget is crucial before exploring new car options.

Emergency fund or safety buffer

Do you have savings to cover unexpected expenses? Before taking on new debt, ensure you have a financial cushion. This prevents you from defaulting on payments if life throws you a curveball.

Debt and interest rates

List all your current debts, including the Drivetime loan. Note the interest rates on each. High-interest debt should be a priority. Understand your current Drivetime loan’s terms, including any early payoff penalties.

Credit impact

Check your credit score from all three major bureaus (Equifax, Experian, and TransUnion). Your credit score is a major factor in getting approved for a new auto loan and determining the interest rate you’ll pay.

Step-by-step (simple workflow)

1. Determine your current car’s market value.

• What to do: Research your car’s value on reputable sites like Kelley Blue Book (KBB), Edmunds, and NADA Guides. Get quotes from online buyers like Carvana or Vroom.
• What “good” looks like: You have a realistic range of what your car is worth in the current market, independent of Drivetime’s offer.
• Common mistake: Relying solely on the dealer’s initial appraisal.
• How to avoid it: Do your homework before you even step onto a lot.

2. Understand your Drivetime loan status.

• What to do: Contact Drivetime or check your account to find out your current payoff amount, including any potential fees or interest accrued.
• What “good” looks like: You know the exact amount needed to pay off your loan in full.
• Common mistake: Assuming the payoff amount is the same as your outstanding balance.
• How to avoid it: Always ask for a written payoff quote.

3. Calculate your car’s equity or deficit.

• What to do: Compare your car’s market value (from Step 1) to your payoff amount (from Step 2).
• What “good” looks like: You know if you have positive equity (market value > payoff) or negative equity (market value < payoff).
• Common mistake: Not realizing you owe more than the car is worth.
• How to avoid it: Do the simple math: Market Value – Payoff Amount = Equity/Deficit.

4. Explore external financing options.

• What to do: Get pre-approved for an auto loan from your bank, credit union, or online lenders.
• What “good” looks like: You have a pre-approval letter with a specific loan amount and interest rate.
• Common mistake: Only relying on dealership financing.
• How to avoid it: Shop for loans before you shop for cars.

5. Identify potential dealerships or private sellers.

• What to do: Research dealerships that might accept your current vehicle as a trade-in, or consider selling it privately.
• What “good” looks like: You have a list of places to explore for your next vehicle.
• Common mistake: Going to the first dealership you see without considering alternatives.
• How to avoid it: Broaden your search to include different types of sellers.

6. Get an offer from Drivetime (if applicable).

• What to do: If you’re considering trading it back to Drivetime, ask for their trade-in offer.
• What “good” looks like: You have a concrete offer from Drivetime, which you can then compare.
• Common mistake: Accepting Drivetime’s first offer without comparison.
• How to avoid it: Treat this as just one of many potential offers.

7. Compare trade-in offers.

• What to do: Compare the offer from Drivetime (if any) with offers from other dealerships and online buyers.
• What “good” looks like: You have a clear understanding of which buyer is offering the most for your current car.
• Common mistake: Not comparing apples to apples – ensure offers are for the same condition and mileage.
• How to avoid it: Get all offers in writing and note any conditions.

8. Shop for your next vehicle.

• What to do: Visit dealerships or private sellers with your pre-approved financing in hand. Negotiate the price of the new vehicle.
• What “good” looks like: You’ve found a vehicle you like at a price you can afford, with financing terms that work for you.
• Common mistake: Focusing too much on the monthly payment and not the total price or loan term.
• How to avoid it: Negotiate the car’s price first, then discuss financing and trade-in.

9. Finalize the deal.

• What to do: Review all paperwork carefully, ensuring the agreed-upon price, loan terms, and trade-in value are accurately reflected.
• What “good” looks like: You understand and agree to all terms before signing.
• Common mistake: Signing documents without reading them thoroughly.
• How to avoid it: Take your time, ask questions, and get clarification on anything you don’t understand.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Not knowing your car’s actual market value	You accept a lowball trade-in offer, losing potential money.	Research your car’s value on multiple reputable sites before engaging with any buyer.
Ignoring your credit score	You get denied for financing or offered very high interest rates, increasing your overall cost of borrowing.	Check your credit report and score from all three bureaus before applying for any new loans. Address any errors or issues.
Relying solely on dealership financing	You miss out on potentially better interest rates and terms available from other lenders.	Get pre-approved for an auto loan from your bank or credit union before visiting a dealership.
Not calculating your car’s equity/deficit	You might be surprised by how much you owe or how little your trade-in is worth, impacting your budget.	Subtract your loan payoff amount from your car’s estimated market value to determine your equity or deficit.
Focusing only on the monthly payment	You end up with a longer loan term and pay significantly more interest over time.	Negotiate the total purchase price of the new car first, then discuss loan terms and monthly payments. Understand the loan’s duration.
Not getting a written payoff quote	You might be charged unexpected fees or interest, leading to a higher final amount owed.	Always request a formal, written payoff quote from your current lender (Drivetime in this case) before finalizing any trade-in or sale.
Falling for high-pressure sales tactics	You make an impulsive decision and agree to terms that aren’t in your best financial interest.	Be prepared to walk away. Know your budget and stick to it. Don’t be afraid to take time to consider an offer.
Not considering selling privately	You might leave money on the table if private sale prices are significantly higher than trade-in offers.	Research the private sale market for your vehicle. Weigh the extra effort against the potential financial gain.
Failing to read the contract	You agree to terms you didn’t understand, potentially leading to hidden fees or unfavorable conditions.	Read every document carefully. Ask questions about anything unclear. Do not sign until you are completely satisfied with all terms.
Accepting a trade-in offer that includes fees	The dealer might be masking a lower offer by adding fees that reduce your net trade-in value.	Ask for a breakdown of the trade-in offer, including any deductions or fees. Ensure the offer reflects the car’s market value before add-ons.

Decision rules (simple if/then)

• If your current car has significant positive equity, then you have more leverage to negotiate a better deal on your next vehicle because the equity can be applied as a larger down payment.
• If your current car has negative equity, then you may need to pay the difference out-of-pocket or roll it into the new loan, which will increase your monthly payment and total interest paid.
• If your credit score is excellent, then you can likely secure a lower interest rate on a new auto loan, saving you money over the life of the loan.
• If your credit score is poor, then you may need to consider lenders specializing in subprime auto loans, but be prepared for higher interest rates and potentially stricter terms.
• If Drivetime is your only financing option and you have negative equity, then you might face challenges trading in, as they may not offer a competitive trade-in value to offset the deficit.
• If you have a solid emergency fund, then you can afford to be more patient in finding the right vehicle and deal, rather than rushing into a less-than-ideal situation.
• If your goal is to lower your monthly car payment, then look for vehicles with lower price points, longer loan terms (with caution), or consider a less expensive used car.
• If you are considering selling privately, then be prepared to invest time in advertising, showing the car, and handling the paperwork, as this often yields a higher price than trade-in.
• If you have multiple car loans, then prioritize paying down the one with the highest interest rate first, as this will save you the most money in the long run.
• If a dealership offers a trade-in value that seems too good to be true, then it likely is; investigate further to understand how they are compensating for it.
• If you are unhappy with your current Drivetime loan terms, then explore refinancing options with other lenders before initiating a trade-in process.
• If you have a clear understanding of your budget and financing options, then you are less likely to be swayed by impulse purchases or unfavorable dealer add-ons.

FAQ

Can Drivetime buy out my current loan if I trade it in?

Yes, Drivetime, like most dealerships, can facilitate the payoff of your current loan as part of the trade-in process. They will apply the trade-in value towards your outstanding balance.

What if I owe more on my Drivetime car than it’s worth?

If you have negative equity, the difference between your loan payoff and the car’s market value will need to be addressed. This might involve paying the difference in cash, or it could be rolled into the new car loan, increasing your overall debt.

How does Drivetime typically value trade-ins?

Drivetime, like any dealership, will assess your car’s condition, mileage, and market demand to determine its trade-in value. Their offer will be influenced by their own profit margins and the wholesale market.

Are there specific dealerships that are better for trading in a Drivetime car?

There’s no universal rule. Some dealerships might be more willing to work with buyers who have prior financing through companies like Drivetime. It’s best to research and get offers from multiple sources.

Will trading in my Drivetime car affect my credit score?

The act of trading in a car itself doesn’t directly impact your credit score. However, applying for a new auto loan to purchase your next vehicle will result in a hard inquiry, which can slightly lower your score temporarily.

What if Drivetime’s trade-in offer is low?

If Drivetime’s offer is lower than market value or other offers you’ve received, you are not obligated to accept it. You can choose to sell your car elsewhere or even pay off the Drivetime loan and keep the car.

Should I pay off my Drivetime loan before trading in?

This depends on your equity. If you have positive equity and can get a better offer selling privately, it might be beneficial. If you have negative equity, trading in with Drivetime might be simpler, but compare offers carefully.

What are the risks of rolling negative equity into a new loan?

Rolling negative equity means you’ll owe more on your new car than it’s worth from day one. This increases your monthly payments, the total interest paid, and makes it harder to build equity in your new vehicle.

What this page does NOT cover (and where to go next)

• Specific details on Drivetime’s internal financing policies or their current trade-in programs.
• Negotiation tactics for specific car models or brands.
• Detailed analysis of various auto insurance options for a new vehicle.
• The process of selling a car privately versus trading it in.
• In-depth guidance on repairing or maintaining your current vehicle if you decide to keep it.