Can I Trade In a Vehicle I Still Owe Money On?

If you still owe money on your car, but are thinking about getting a new one, you may be wondering if you can conduct a trade-in; the answer is yes. However, conducting this type of transaction can be a bit confusing if youve never done it before. Lets look at how it works.

Trading in a Car with an Impending Loan

So you would like to acquire a new vehicle, but you know that you still owe money on your car. This is something that dealers are accustomed to taking care of. However, its important that you understand the process so that you will feel comfortable that it is being handled correctly.

1. First, you determine the selling price of the vehicle you want to purchase, then add the tax and title fees.
2. Next, combine your trade-in allowance and amount required to pay off your loan. This combination will be subtracted from the selling price and gives you your total amount due.
3. Next, calculate any cash down amounts or rebates that can reduce this loan amount. This amount will be your new auto loan.

Making Sure the Dealer Pays Off Your Trade-In

While most dealers are great about paying off the vehicle not long after trading in a car, on occasion, if they are a little short on money, they may wait a month or more before taking care of it. This can be bad for you because until your loan is paid off, you still owe money on your car. In other words, youll have to keep making the monthly payment until they take care of the balance. To prevent this from happening, ask the dealer to put in writing that they will pay it off immediately. This way, you wont find yourself being responsible for two monthly payments.

Trading in a car when you still owe money on your car can seem a bit confusing. But as long as you keep track of how much you owe and make sure the dealer pays off your loan balance, you should be able to drive off the lot with the vehicle of your dreams and only one monthly payment.