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Can I trade in a car that has negative equity?
I want to trade in my car to get a new truck, but I'm upside down on the loan. Can I still trade it in? How does that work?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Good news for you—you’ll likely be able to trade in your old car and get a new
car loan
even if you’re currently upside down
.When you trade in a car with negative equity, your loan balance is higher than the actual cash value of your vehicle. First, your dealer will pay off part of the loan with the value of the car. The remaining balance on the loan is then yours to pay out of pocket, or you can roll the leftover amount into your new loan.
Keep in mind that the rollover will put you heavily upside down on your new loan for a while—but you’ll be able to get the truck you want. To reduce your balance quickly, you might consider doubling up on payments or paying extra lump-sum payments every so often.
The final thing to remember is that you’ll need to transfer your car insurance over to the new truck. Before you do this, be sure to compare quotes with
Jerry
and make sure you’re not missing out on extra savings! View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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