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I
might also refer to equity as the "ghost"
that could be hiding in your car. It lies quietly, so
that you might not notice its presence. That is, until
it's time to trade.
Equity
is the difference between your car's market value and
the amount still owed. There are three kinds of equity:
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Negative equity, the most common, occurs when
the amount you owe on the vehicle is more than
the vehicle's market worth. Trading is made relatively
difficult, but not impossible, when a buyer is in
this position.
-
Balanced equity, which is rare, occurs when
the amount you owe on the vehicle is about equal
to the vehicle' market worth. Trading is no problem.
-
Positive equity, even more rare, occurs when
the amount you still owe on the vehicle is less
than the vehicle's market worth. Trading is no problem.
While
balanced and positive equity are rare, if one were fortunate
enough be in that position, there will be no unpleasant
surprises at trade-in time.
Unfortunately,
far too many of my first-time clients find themselves
in a negative equity position. This condition is largely
due to paying too much for their vehicle and/or trading
vehicles to quickly (carrying and building negative
equity with each successive "new" car). This
can lead to major trouble and disappointment.
Since
our cars are our second most important investment, I
feel that those of us without unlimited funds should
conduct our vehicle purchases and their frequency with
great responsibility. This is always one of my top priorities
when assisting a client with a purchase.
After
a review of my client's financial position (in terms
of the vehicle to be traded) and their long-term plan
for the new vehicle, I work to find the vehicle and
method of financing that will best suit their needs.
My goal in this search will be to find the best way
to help them achieve their goals while making every
effort to overcome existing, and prevent any future
increase in their negative equity.
I
think our cars should be a reasonable investment, rather
than a fire in which our money "burns."
If
this sounds good to you, let me try to make it happen
as quickly as possible so you can spend your money on
more important things.
Frank M. Price, Owner
803-732-1150
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