What happens when I trade my car in for another one?

Question

I traded my car into the dealership for a truck. they paid off my loan, from that car. and now i have this loan out for this truck. which is okay with me becus we needed a truck and not a car and this was the only way to do it. but since the dealership paid off my car loan, woudlnt that show up under my credit that i paid off an auto loan? i hear that that is a good thing to have a paid off auto loan show up on your credit. but now im hearing from others that under my credit it will show up that i have two loans out and it would be more difficult to buy a house. which is true? am i okay with what i did? or is my credit now bad? help!

Answer 1

When a car dealership pays off the note on your trade-in, it counts towards you having paid off the loan. Sometimes, however, it may take a while for that updated info to reach the credit bureaus while initiating a new loan for the new vehicle may reach them quicker. The end result is that there may be a short period where you appear to have 2 loans. Financial institutions are aware of this and all you'll have to do is provide proof that the previous loan was paid off as part of the trade-in deal and they will take that into consideration.

Answer 2

On your credit it should state what has been paid and the balance owed. If the balance was o on your credit then you are fine. With the dealership did they add any new amounts with the truck, because if they did then sometimes that probably made the amount higher. If you have negative equity then you would have needed a down payment, but they paid the load off for you so you shouldn't have to worry, just make sure you check your credit report in now or in about two months to make sure everything is clear. As long as you still pay on the auto loan balance then your credit is ok, it should not affect you buying a house as long as the dealerships paid that loan off and did not add it to your truck.

Answer 3

If the dealership paid off the loan (which they have to do to get a clean title), the original loan should appear on you credit report as paid and closed. This does not look like a current loan to anyone who knows how to read a credit report.