Can You Trade in a Financed Car?

You can definitely trade in a financed car. Whether or not trading in your financed vehicle is possible isn’t what makes this option something that should be carefully considered, though. Remember: When you finance a car, you’re contractually obligated to pay it off. If you don’t, you can default on your loan. 

If you trade in your financed car and it’s worth less than your outstanding loan amount, you may have “negative equity” in your vehicle, necessitating you to continue making payments even without a car to drive. If your car is worth more than your payments, though, trading in your financed car could be a very smart financial decision! Contact us to learn more.

How Does Trading in a Financed Car Work?

1. Figure out what the remaining balance on your loan is. It’s usually found on your monthly payment statement. Of course, our finance team can help you locate this figure.
2. Use our online trade in valuation tool or one from a reputable service such as Kelley Blue Book or Cars.com to get an estimate on the book value of your current car. Note that this is simply an estimate, and a physical vehicle appraisal must be done before you get the purchase price for your vehicle.
3. If the remaining amount of your auto loan is less than the trade in offer from the dealership, then you’ll have money leftover that will go toward purchasing a new car from the dealer. 
1. For example, if you still owe $8,000 on your car in McKinney, and the dealer offers you $10,000 to buy the car, the loan can be paid off and you’ll have $2,000 to contribute toward your next car. 
4. If the remaining balance of your auto loan is more than the trade-in offer, then you’ll still owe money on your car. But not all is necessarily lost. We may be able to roll your old loan into your new one if you’re really in need of a new vehicle for any reason. Call us at (877) 506-2932 to figure out if this makes financial sense for your situation.

What Does “Rolling Over” a Loan Mean?

Rolling over a loan is what it sounds like. Rather than having to pay back your loan for your old vehicle, you still have to pay it back, but it’s rolled into, or tacked onto your next new vehicle loan. Think of how when you trade in a vehicle with no payments due, the full value gets subtracted from your new loan. The reverse can be said of a vehicle with negative equity. The amount of the loan you still owe gets tacked onto the principal you owe, and thus, monthly payments.

Town North Mazda Has Your Next New Car for Sale in Richardson!

Now that you know it’s possible to trade in your old financed car, are you ready to take the next steps to make that happen? Apply for financing online, then see how much your trade is worth vs. what you owe on your loan. If your vehicle is leased, we can also help you calculate a lease buyout.