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How do I trade my car when I still owe on it?

I still owe $2,000 on my car loan, but I'd like to get a new car. Can I trade my car in even if I still owe money on it?

avatar
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Yes, you can trade in your car even if you still owe money on it! It is a common practice, so you shouldn’t have any issues when doing so.
Shop around at multiple dealerships to get an idea of which is offering the best rate and trade-in value for your car. Ideally, a dealership should offer you $2,000 or more. So if you only owe that much, your loan will be paid off!
If the trade-in value is less than the remaining balance on your
car loan
, whatever you owe on your loan will be rolled into your new loan.
So when you sign your terms with your new lender and the dealership, they’ll agree to pay off your current loan and then add the remaining balance to your new loan. While this isn’t an ideal situation, in some cases, you may end up with a better rate than you previously had!
Once you trade in your car and get a new one, be sure you have the proper insurance coverage. Just like with your car, shop around with
car insurance companies
to find the best rate. If you’d like help, the
Jerry
app is a great place to start. Jerry finds personalized quotes from top insurance providers in seconds!
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