How Can You Make Money Off of Your Vehicle? It’s About Managing Your Equity.
The term “equity” can be defined as the difference between the value of the assets and the cost of liabilities of something owned. So for example if you own a vehicle worth $15,000 but own $5,000 on it, your equity is $5,000. But this can be a very delicate balance.
As we all know vehicles aren’t the best in holding their value, and to be clear this isn’t due to the manufacture. If all vehicles out there used the proper gas, got regular maintenance, were driven properly and there were no accidents the value of a vehicle would be much higher. But sadly, that’s not the world we live in and is why making sure to keep a close eye on what your vehicles is worth is very important as at some point that value will go even further down and you’ll lose even more value.
Knowing the value of your vehicle is the key between getting into a new vehicle for less than you were paying for your current vehicle or paying the same amount or even more.
You can look at it the same way as buying a house. When you have $50,000 in payments made towards your mortgage and you’re home is now worth $25,000 more than what you bought it for you now have $75,000 worth of equity to put towards a new home. That extra money can get you that pool you’ve always wanted, live in the neighborhood close to your family, or maybe you rather move to a different neighborhood further way for your in-laws.
The same principle applies for your vehicle, knowing when the right time for you to trade it in can get you a larger vehicle for your expanding family, or get you things like wifi to keep your kids entertained on those long trips. As long as you have positive equity in your vehicle the opportunities can be endless. Heck, even if you regret the colour you bought and really wanted one in white diamond instead you can now do that and possibly make your payments even less. Win win!
What should you take into account when determining your vehicles equity?
Current Warranty Still Available on Your Vehicle: The more warranty, the higher the trade value. If your vehicle is in its final year of warranty it would be a good idea to really consider trading it in.
CarProof/CarFax Report: goes without saying, but the less accidents a vehicle has been in, the more it’s worth.
The Canadian Dollar: Exporting is big business for car dealers, so when the dollar is low dealers are able to export vehicles for much more than they can get for them here in Canada.
Your Vehicles Kilometers: Even if your vehicle is well maintained and you know she runs like new, car dealers will always look at the kilometers that are on the vehicle. If you can get into positive equity and keep the kilometers under 100,000 you're in good shape.
Canadian Black Book: The market, like most other things, really dictates the value of your vehicle. Knowing and understanding what your vehicle is worth on Canadian Black Book gives you a good idea on the perceived market value of your vehicle. You can do that quickly online here.
Current Promotions and Incentives: This doesn’t necessarily help you with the value of your current vehicle, but if you have little to no warranty left on your vehicle and have been in a minor accident though your vehicle still might have some negative equity, current incentives and promotions by the dealership can help take that negative equity into positive and help make your new payments even less than they are now. You can view up-to-date GMC incentives and rates here, Buick incentives and rates here and Cadillac incentives and rates here.
With that all said, it can be a major pain to keep on top of this and even harder to understand. This is why all our Gauthier Cadillac Buick GMC customers, no matter if they bought from us or just service, receive information regarding their vehicles current equity on a monthly basis. We like to call it “Your Vehicles Monthly Back Statement”. Every month we send our clients a letter in the mail taking their current vehicles equity, current incentives, the Canadian dollar and approximate export value and send them a statement that outlines what they’re new monthly payment could look like if they traded in today.
If you’re one of the lucky ones who receive this piece, please know that this isn’t a typical marketing ploy. Only our clients who can get into a new vehicle for the same amount or less receive this information and it’s meant to help you make the decision on trading in your vehicle when the time is right. And if you don't currently get this statement and you bought from somewhere else, email us at firstname.lastname@example.org and we'll be happy to asset your current vehicle's equity and put you on the mailing list so you can stay on top of it.
We’ve had clients receive their vehicles bank statement for months and didn’t react. Then all of the sudden they saw the possible new payment price go up a bit and thought that they better act before their vehicle loses even more value. Each and every single time those clients got their vehicle for even less than their statement said as the vehicle was in great condition, and were able to upgrade to a bigger vehicle with more options and technology for the same amount and often even less than they were paying.