Should I pay my auto loan off before I trade my Subaru Outback in?

"I want to finance a new car, but I currently have a car loan. There's still $11,000 left on the loan, and it will be upside-down for at least the next 18 months.

Should I pay my car loan off or down before I trade my Outback in?"

Answer
“At the very least, you’ll want to pay down your car loan to the breakeven point. This means that whatever money the dealer gives you for the trade-in should completely pay off your current auto loan.
If they don’t provide fair value (and they most certainly won’t), sell the car privately for more money.
Never trade in a car that you’re upside-down on unless you want to constantly have negative equity on a car that won’t be worth all that much at the end of the loan.”
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Eric Schad
Answered on Jun 15, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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