Can I trade in a car with a loan?

Is it possible to trade in a car with a loan on it? My husband and I are getting ready to have our third child. My car doesn't really have enough room for three kids, and I want to trade it in before the new baby comes along. The issue is I'm still paying off the loan for my current car.

Answer
Congratulations on the new baby! Yes, it is possible to trade in a car with a loan, but there are a few things that you should keep in mind to make sure that the process goes smoothly.
First, trading in a vehicle that isn’t paid off won’t make your loan disappear. Rather, the dealership you choose will pay off what’s left of your loan for you as part of the trade-in process.
If you’re currently upside down on your loan, be prepared for higher monthly payments on your new car loan. However, if you have equity on your current car, it will be applied to your new loan. This can be really helpful when shopping for a new vehicle!
Since you’re updating your family car, you should be shopping for new insurance, too. The Jerry app makes it easy! Jerry will collect insurance quotes for you at no cost, so you can compare prices and policies without the hassle. Once you find one you like, Jerry can sign you up and cancel your old policy for free!
Liz Jenson
Answered on Nov 05, 2021
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