Can You Trade In a Financed Car? Everything You Need to Know

A common question we hear at Sid Dillon is, “Can you trade in a financed car?” Fortunately, the answer is absolutely yes! It is entirely possible to trade in a financed car — however, keep in mind that the loan on your vehicle doesn’t simply disappear because you’ve traded it in. You are still responsible for the remaining balance on the loan even after you trade in the vehicle. Our finance team is here to walk you through all your options, and we would be more than happy to answer any questions you may have about car loans, interest rates, credit scores, and selling a car near Omaha.

How Does Trading in a Financed Car Work?

1. Determine your remaining loan balance: See exactly how much you still owe on your auto loan. This payoff information is typically listed on your monthly statement, or you can contact your lender directly to get the exact payoff amount.
2. Estimate your current car’s value: Use our online “value your trade” tool or a trusted service like Kelley Blue Book to get a fair estimate. Note that this is simply an initial estimate; the dealership will establish the official value once the vehicle has been physically inspected in person.
3. Apply positive equity to your next car: If the remaining amount of your auto loan is less than the trade-in offer from the dealership, you have positive equity. For example, if you still owe $7,000 on your car in Lincoln, and the dealer offers you $8,000 to buy it, the old loan will be completely paid off and you’ll have $1,000 left over to contribute toward your next vehicle purchase.
4. Address any negative equity: If the remaining balance of your auto loan is more than the trade-in offer, you still owe money on your car—this is referred to as negative equity. You have a couple of options: you can pay off the remainder of the balance in full before making your next vehicle purchase, or you can roll over the balance into your next auto loan with the dealer.

What Does “Rolling Over” a Loan Mean?

Rolling over a loan does not mean that you are no longer responsible for your old balance. While a dealership may state that they will pay off your old loan no matter how much you owe, that remaining price simply gets added to the new loan on the next car you buy. This means you will be paying the dealership back for the old loan at the same time that you are paying off the loan on your new vehicle.

Find the Vehicle of Your Dreams at Sid Dillon

Whether you are ready to trade in a financed car for a lease or get behind the wheel of a new vehicle, the team at Sid Dillon makes the process completely stress-free. Be sure to check out our current new vehicle specials in Omaha and explore our helpful car buying tips to prepare for your next purchase near Fremont. Contact us today for more information, or learn what you need to do to trade in your car online right now.

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