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Can I trade in my financed car?
I haven’t paid off my car yet, but I have a new baby on the way, and I want to get a bigger car before she arrives. Would I be able to trade in my financed car, or do I have to pay it off first?
Liz Jenson · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Congratulations on your new baby! Yes, you can absolutely
trade in a financed car
without paying it off first. The loan won’t just disappear, though; instead, the remaining balance will roll over to your new loan.If you have
negative equity
, meaning you owe more than your car is worth on your loan, that balance will be added to the amount that you owe on your new loan. For example, if your original car is currently worth $10,000 but you still owe $12,000 on your loan, your dealer will add that $2,000 to your new car loan.If you have positive equity, meaning you owe less than your car is worth, your equity amount will be subtracted from your new loan. For example, if your original car is currently worth $10,000 but you only owe $6,000 on your loan, your dealer will subtract that $4,000 from your new car loan.
When you trade in your car, you’ll also need to update your insurance. The
Jerry
app makes it quick and easy to find the best rates available on the coverage you need—no long forms or phone calls necessary. Download the app and answer some quick questions to see quotes customized for you.View full answer
- Gregory R.
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