Can you trade a car in with a loan balance?

I saw a car I want but I already have an old car loan balance. Can I trade my car in even though I still owe on my loan?

Yes, you can trade your car in with a loan balance. But first, you’ll need to speak with your lender and figure out if you have positive or negative equity:
  • You have positive equity when your car is worth more than the remaining balance on the loan
  • You have negative equity when your car is worth less than the remaining balance on the loan
If you have positive equity, you can close off your old loan and apply the remaining amount towards a new car.
If you have negative equity, you have three options:
  • Pay off the difference between your car’s trade-in value and the remaining balance on your loan (if you have the money to do so)
  • Roll the remainder of your old loan into a new loan with a new car
  • Wait to trade in your car until you can pay off more of your existing loan
When you get a new car, you may find that your car insurance rates will change. You can easily search for a better deal using the Jerry app to compare insurance quotes from over 50 providers. The average Jerry user saves $879 per year on car insurance, and you can put that money towards paying off your new loan.
Lauren Smith
Answered on Nov 18, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.

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