Can You Trade In a Financed Car?

Tiny car with coins and finance paperwork


Whether you’re ready for another upgrade to your Belleville-area travels or you want to bring home a vehicle with a more affordable monthly payment, if you still owe money on your current vehicle, you’ll wonder: Can you trade in a financed car? Yes, trading in a financed car is almost always a possibility. However, there are a few factors you need to consider before moving forward. How does trading in a financed car work? Read on with the Auffenberg CDJR finance center to learn more!

How Does Trading In a Financed Car Work?

Whether you want to trade in a financed car for a lease or you intend to get a new auto loan with a more affordable payment, Here is what you should know about trading in a financed car:

  1. Confirm the current balance of your existing loan; it should be on your monthly statement, but you can also contact your lender if you’re uncertain.
  2. Estimate the current value of your vehicle using a trade-in value calculator. Of course, the number you get is only an estimate and the actual value may vary a bit after your vehicle is inspected at the dealership.
  3. If your current loan balance is less than your car’s current estimated market value, then you have positive equity. This means you’re in an excellent position to be trading in your financed car because after you trade it in and pay off the loan, you’ll be left with a bit of extra money to put toward your next purchase. Here is an example to demonstrate how positive equity works:
  4. If you owe $5,000 on your vehicle and its estimated value is $10,000, you can pay off your loan with the trade-in money and still have $5,000 leftover.
  5. If your current loan balance is more than your car’s current value, this is known as negative equity. Trading in a financed car with negative equity is still possible, but not ideal for many Smithton drivers. If you’re dead set on trading in, you can either wait until you’ve paid off your car or consolidate your loan balance with a new loan on a different vehicle.

What Does it Mean to Consolidate Your Loan?

If you have negative equity but you still want to trade in your financed car, you can consolidate or “roll over” your loan. This means the dealership will pay your remaining loan balance, but the exact amount that they pay will be added onto the new loan for your next purchase. Essentially, you pay off the dealership for the old loan while also paying off the new loan.

Can You Trade in a Financed Car at Auffenberg CDJR?

How does trading in a financed car work at Auffenberg CDJR? Our team makes it easy for East St. Louis drivers to reach their financial goals, whether that’s to trade in a financed car for a lease or to find a new vehicle that’s easier to afford. Contact us with any remaining questions or concerns, and be sure to explore our new and used inventories if you’re interested in buying or leasing with us.

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