Your current car isn’t:
paid off.
But you want:
another one.
This is incredibly common.
Maybe your family needs:
more room.
Maybe your work has changed.
Maybe the car is becoming:
unreliable.
Or perhaps you simply want to replace it before:
the finance term ends.
The important thing to understand is that changing cars doesn’t make:
the existing loan disappear.
Before working out the finance for the next vehicle, we need to know:
what is your current car worth and what is the current finance payout?
Those two numbers can shape:
the entire transaction.
A Car Upgrade in Liverpool
A buyer in Liverpool currently drives a:
four-year-old SUV.
They want to replace it with:
a newer seven-seat model.
The new vehicle costs:
$48,500.
Their existing SUV is likely to trade for around:
$24,000.
They still have:
finance owing.
The current payout is:
$16,500.
That means the existing vehicle may have approximately:
$7,500
in equity before considering the final trade and settlement figures.
Now we can start understanding:
the replacement transaction.
Get the Payout First
Don’t guess:
what you owe.
Don’t use:
last year’s loan balance.
Don’t calculate:
the original amount minus the repayments you’ve made.
Obtain:
a current payout figure.
Why Isn’t the Payout Just the Account Balance?
Depending on the loan, the payout may include:
amounts determined under the contract.
The figure needed for settlement is:
the actual amount required to close the existing finance at that time.
Then Find Out What the Car Is Actually Worth
The second number is:
the vehicle value.
If you’re trading it:
what is the dealer actually offering?
If you’re selling privately:
what is a realistic sale price?
Don’t automatically use:
the highest advertised price for a similar car online.
Advertised Price Isn’t Sale Price
You might see your model advertised for:
$29,990.
That doesn’t necessarily mean:
your car is worth $29,990
or
that someone will pay you that amount.
Kilometres,
condition,
specification,
location,
service history,
and market demand
can all influence the result.
Positive Equity Makes the Picture Easier to Understand
In our Liverpool example:
trade value: $24,000
finance payout: $16,500
approximate equity: $7,500
That $7,500 may potentially contribute towards:
the next transaction.
But use:
the final figures,
not estimates.
What if the Trade Offer Changes?
Suppose you expected:
$24,000.
The dealer offers:
$21,500.
Now the approximate equity is:
$5,000
rather than:
$7,500.
That changes:
the next finance requirement.
Tell the broker.
What if I Sell the Car Privately Instead?
You may potentially receive:
more
than a trade-in offer.
But now you need to coordinate:
the private sale,
existing finance payout,
vehicle handover,
and your next purchase.
A higher sale price isn’t automatically:
the easier transaction.
Can I Just Keep the Old Loan and Buy Another Car?
If you’re keeping:
both vehicles,
that’s a different scenario.
The existing loan remains:
an existing financial commitment.
The new application needs to be assessed with:
that commitment still present.
What if I’m Trading the Old Car?
Then the existing finance generally needs to be:
dealt with as part of the replacement transaction.
The broker needs:
the payout
and
trade information.
Don’t Tell Us “The Dealer Is Paying Out My Loan” Without the Numbers
We need to know:
how much they’re paying for the vehicle
and
how much is required to clear the finance.
Those figures determine:
whether you have equity,
no equity,
or negative equity.
What if They’re About the Same?
Suppose:
trade value: $18,000
payout: $18,200
There’s essentially:
very little equity,
with a small shortfall based on those figures.
That’s very different from:
having a $10,000 contribution.
What if I Owe More Than the Car Is Worth?
That’s:
negative equity.
It deserves its own article because it’s one of the most misunderstood parts of:
changing financed cars.
We’ll deal with that in:
Blog 9.
Don’t Assume Negative Equity Can Always Be Added to the New Loan
Whether a shortfall can be incorporated into a new finance structure depends on:
the applicant,
new vehicle,
lender,
loan amount,
and overall transaction.
Sometimes a borrower may need to contribute:
cash.
Sometimes another structure may potentially be considered.
Sometimes the proposed replacement simply:
doesn’t work.
Why Does the New Vehicle Matter?
Suppose you have:
a $5,000 shortfall
on the old car.
You’re buying a new vehicle for:
$50,000.
If you want to finance the purchase plus the shortfall, the proposed borrowing is no longer simply:
$50,000.
The lender is considering:
the complete transaction.
Don’t Hide the Old Loan
It will generally form part of:
your credit position
and
the transaction anyway.
Tell the broker:
upfront.
“But I’m Trading It, So It Won’t Exist”
Eventually:
perhaps.
But until it is:
paid out,
the debt exists.
The finance application and settlement structure need to account for:
how it will be cleared.
What if I Have Cash as Well?
That can change:
the structure.
Suppose our Liverpool buyer has:
$5,000
they are prepared to contribute.
They also have approximately:
$7,500 equity
in the trade.
Now there may be roughly:
$12,500
available towards the replacement transaction, subject to:
the final figures.
But Don’t Empty Your Savings Automatically
As we’ve discussed throughout this journey, the fact that you have:
cash
doesn’t necessarily mean every dollar should go into:
the car.
Consider:
your broader financial position.
What Happens to the Old Finance at Settlement?
The required payout amount needs to be:
directed appropriately
so the existing finance can be:
cleared.
The exact settlement process depends on:
the transaction and lender.
Does the Old Loan Transfer to the New Car?
Usually don’t think of it as:
physically moving the same loan from one vehicle to another.
The replacement transaction generally involves:
dealing with the existing debt
and
arranging the new finance structure.
The actual process depends on:
the products and lenders involved.
What if My Current Loan Has a Balloon?
Then the payout may be:
larger than you expected.
A balloon means part of the debt was:
deferred.
If you’re changing cars before or around the end of the term, obtain:
the actual payout figure.
Don’t assume the regular repayments tell you:
what remains owing.
What if I’m Near the End of My Current Loan?
You may have:
more equity
than earlier in the term.
But don’t assume.
Get:
the numbers.
Vehicle depreciation and:
loan reduction
don’t necessarily occur at the same rate.
Changing Cars Early Can Create a Different Position
Suppose you bought the vehicle:
12 months ago
with relatively little contribution.
You now want:
another car.
The current vehicle may have depreciated significantly while:
a substantial loan balance remains.
That can create:
a shortfall.
This Is Why Constantly Changing Cars Can Become Expensive
Each replacement can involve:
transaction costs,
depreciation,
new finance,
and potentially carrying forward:
a shortfall.
The fact that a new repayment looks affordable doesn’t automatically mean:
the overall transaction is sensible.
The Buyer Says “I Just Want the Same Repayment”
This is another assumption we see.
Someone currently pays:
$220 a week.
They want a more expensive vehicle and say:
“Just keep it around $220.”
But repayment depends on:
loan amount,
term,
rate,
fees,
and structure.
Keeping the same repayment may require:
a different term
or
other changes.
The old repayment isn’t a magic budget setting.
Start With the Transaction, Not the Desired Weekly Number
We need:
new car price,
old car value,
old payout,
cash contribution,
and applicant position.
Then potential finance options can be:
investigated.
What if the Current Car Has Mechanical Problems?
That can complicate:
the value.
You may think it’s worth:
$20,000.
But if it needs:
major repairs,
the actual trade or sale value may be:
lower.
Don’t construct the next finance transaction around:
an unrealistic value.
What if the Car Has Been in an Accident?
Again:
be realistic about value and disclose relevant information where required.
The market value may differ from:
what you expected.
Can I Upgrade on the Weekend?
Potentially the transaction can:
start.
Thrive is available:
seven days a week.
If you’ve found the replacement vehicle on:
Saturday,
send us:
the new car details,
current car information,
trade offer if available,
and existing finance payout if you have it.
Don’t Wait Until Monday to Discover You Owe More Than You Thought
Even if settlement ultimately requires:
a weekday step,
understanding the transaction over the weekend can save:
valuable time.
Liverpool Example: The Numbers
New SUV:
$48,500
Trade value:
$24,000
Existing payout:
$16,500
Approximate equity:
$7,500
Now imagine the buyer contributes:
another $4,000.
The transaction can be considered using:
the real numbers.
That’s much better than:
“I owe a bit on my old car and want about fifty grand for a new one.”
What if the Dealer Offers to Handle Everything?
You can still use:
your own broker
for the finance.
Give Thrive:
the purchase and trade figures.
The fact that you’re buying through a dealership doesn’t mean:
you must use finance arranged there.
What Should I Send Thrive?
For the existing vehicle:
year,
make,
model,
current payout,
and expected trade or sale value.
For the replacement:
year,
make,
model,
purchase price,
and dealer/private seller information.
Also tell us:
whether you’re contributing cash.
We Can Then See What the Transaction Actually Looks Like
You may have:
positive equity.
You may be:
roughly even.
You may have:
negative equity.
Those three situations can require:
very different conversations.
Want to Upgrade a Car That Still Has Finance Owing?
Don’t wait until you’ve signed for:
the next car
to find out what the current one is doing to:
the transaction.
Get:
the payout.
Get:
a realistic value.
Send Thrive:
the new vehicle.
We’re available:
seven days a week.
From there, we can investigate the replacement finance based on:
what you actually owe,
what your current car is actually worth,
and
what you’re actually buying next.
Because changing a financed car isn’t simply:
“getting another car loan.”
It’s:
closing one vehicle transaction properly while structuring the next one.