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Can you trade your car in with a title loan?
I took my 16-year-old daughter car shopping the other day, and we both ended up finding new vehicles. I purchased her a used car with cash and found an incredible deal for myself. I want to trade in my car for the new one, but it has a title loan. Can you trade your car in with a title loan?
Jack Walsh · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Finding that incredible deal is super exciting, especially if you weren’t looking for it! To answer your question, you can
trade in a car with a title loan
. The dealership will pay off the remaining balance, but the transaction may not lead to the savings you expect.If you have negative equity, also known as an
upside down car loan
, your car’s actual cash value is less than the loan balance.In this is your situation, you can:
- Roll the negative equity into your new car loan and pay a higher monthly payment.
- Pay the difference in vehicle value and loan balance to lessen the monthly payment.
- Wait until the title loan is completely paid off to trade in the vehicle.
Suppose you have positive equity in your car, meaning the vehicle’s value exceeds the remaining loan balance. In that case, trading in the car would be advisable, and you can use the money as a down payment on the
car loan
.View full answer
- Gregory R.
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