Securing a car loan allows buyers to pay off an automotive purchase over time, breaking a significant sum of money into smaller payments. 

As of 2021, new car prices average more than $45,000, and used cars have a median cost of more than $25,000. Understandably, many buyers choose to finance their vehicle purchase, making it a more manageable transaction.

The total cost of an auto loan, both monthly and over the years, depends on several factors like down payment, interest rate, APR, and term length. 

A down payment lowers the amount you finance while lessening your monthly payments during the loan term. 

The annual percentage rate, or APR, refers to the interest rate you qualify for, along with additional charges by the lender, and is applied to the principal amount you borrow over time. 

Auto loan terms typically range from 24 to 84 months. Longer terms lower your monthly payments and help you get behind the wheel of something that might have been outside of your initial budget. 

Buying a used car offers several advantages over purchasing a new one. You have the opportunity to save thousands of dollars while still driving away in a nearly new vehicle. 

But where can you go for not only a great deal but also a quality used vehicle? Shift offers best-in-class service contracts at a fair price without sales pressure. You get the great price and value of a used car with the bumper-to-bumper protection of a new car.

Trading in your car is a relatively streamlined process. You take your vehicle to a reseller. They assess its value and give you an amount of money for it. With those funds, you purchase a new car and drive away. 

The cash you receive from a trade-in can be put toward a down payment, lowering the total transaction cost while also reducing your monthly car payments. 

Although usually netting you less money than selling your vehicle privately, trading in saves you from the hassle of placing advertisements, taking phone calls, and working out the details of a sale with a buyer.

Before accepting a trade-in offer, it's a good idea to know the value of your car ahead of time to ensure you receive its fair value. Several methods exist to determine your vehicle's trade-in value, from online resources like Kelley Blue Book to professional appraisals.

Though trading in a car with a loan is possible, how much equity you hold plays an essential role in determining how much money you receive.

Positive equity means the value of your vehicle exceeds your current loan balance. When you have positive equity and trade in your car, the reseller can apply that amount toward your purchase.

But if you have negative equity, meaning your remaining loan payments are greater than the worth of your car, you have a few different options. 

The simplest choice would be to wait until you pay off your loan amount, then trade in your car. 

This way, you'll receive a nice down payment when you eventually trade in. Another option is rolling over the negative equity on your old loan into your next car loan. That increases the total amount you finance and ups the risk of becoming upside-down – owing more than your car's worth – on your loan. 

One other way to trade in a car with negative equity is writing a check for the difference between your car's value and the remaining balance on your loan. If you have the available funds to do so, it lowers the sum of your new loan and lessens your monthly payments.

When it's time to buy your next vehicle, you'll probably want to sell or trade in your old one. But selling your car privately can be a hassle, and how can you know you'll receive fair value if you trade in your vehicle? When selling your vehicle to Shift, there's no need to worry about any of that. All you'll have to do is enter the make, model, year, and mileage on Shift's easy-to-use website, and you'll instantly receive a purchase offer that's valid for seven days. You can get a fair offer, better than at the dealership, driven by powerful machine learning algorithms and tons of data. With Shift, there is no need to spend the extra time waxing and washing the car. A little dirt will not affect the quote, and we fully detail the cars ourselves anyway before listing them for sale.

Trading in a financed car is an option no matter how long you've been making payments, but you may want to wait a while before doing so.

In the first year of ownership, new cars depreciate at the fastest rate, around 20 percent. As time goes by, vehicles stabilize in value and depreciate at a lower rate. 

Suppose you decide to trade in quickly after purchasing and financing a car. In that case, you could find yourself upside down on your loan – owing more than the vehicle's value – which puts you in a complex monetary scenario.

When you're financing your current car, you have the option of trading it in at any point in time. However, depending on how long you've been making payments and whether you have positive or negative equity, it significantly affects the funds you receive. 

When you're in the market for a used car, who can you trust for quality vehicles that last?

At Shift, certified mechanics perform extensive 150-point inspections on every car sold, and you get a free Carfax report for the ultimate in transparency. Shift offers fair, no-haggle prices driven by powerful machine-learning algorithms and tons of data. Shift's website has a large selection of fully inspected cars located across the country that are ready to go. The website is user-friendly, and you'll be able to find various makes and models to suit your needs and budget. And Shift also works with a network of trusted lenders, making it a one-stop shop for finding just the car you want.