Find a new car that fits your budget: Start shopping for new or used vehicles that you can comfortably afford.Here are the general steps you will need to follow: The process of trading in a car with a loan is fairly straightforward, but it’s important to understand the process before you start shopping for a new car. Having negative equity, also called being “upside down,” makes it much harder to trade in or sell your vehicle until you have positive equity. This happens when you owe more on the car than what it’s worth. This will lead to a much higher monthly payment, and potentially, higher interest rates over the lifetime of the loan.Īnother thing to consider is that getting more into debt means you might have negative equity in your vehicle. The balance of your new loan will include the amount you owed on the old loan, and what you owe on the current vehicle. Considering the risks can help you decide if trading in your car is the right decision right now.įirst, it’s important to understand that taking out another car loan could make it more difficult to afford the payments. There are some risks associated with trading in a car that has a loan. What are the Risks of Trading in a Car with a Loan? But as you might have guessed, the new loan will probably have a much higher balance. If it doesn't, your dealer will roll over your loan, combining the deficit with the amount you owe on your new car.Ĭonsolidating what you owe into a single, new loan helps you manage your payments better. Depending on the remaining loan balance, this credit might cover the remaining amount you owe. When you trade in a financed vehicle, your car’s trade-in value gets applied as a credit towards your next loan. However, your car loan doesn't disappear if you trade in your car. Yes, you can trade in a car you're still paying off. Looking for an auto loan that works for you? Easily compare lenders below.Ĭan I Trade in a Car I'm Still Paying Off? In this guide, we’ll explain everything you need to know about trading in a vehicle that’s still being paid off and answer some frequently asked questions. Want to trade in your car before the loan is paid off? It’s possible, but there are a few things you should consider before you take this option.

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