What does rolling over a car loan mean?

I still have a balance on the loan for my current car, but I want to trade the vehicle in. The dealer told me I can roll over the car loan. What does this mean?

Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Rolling over a
car loan
means your old car loan’s balance will be added to your new car loan’s balance. As you might expect, this practice comes with benefits and drawbacks.
One of the biggest benefits of rolling over a car loan is that you don’t have to worry about two loan payments. You can get a new car and still only have one monthly loan payment to make.
However, the drawbacks may outweigh the benefits. In most cases, you’re going to be
upside down
on your car loan for an extended period of time. This means that you’ll owe more on your loan than your new car is worth, which may lead to yet another car loan rollover in the future.
To avoid going upside down on your car loan, you have a few options:
  • Buy a less expensive car
  • Sell your current car privately for more money to pay off your old car loan
  • Negotiate the value of your trade-in to offset the remaining balance of your loan
  • Buy a used car instead of a new car
Doing any (or all) of these things can help you avoid negative equity that can hinder your financial well-being.
Remember that you still need full coverage car insurance with your new loan. To compare rates, download the
app. As an end-to-end car insurance broker, Jerry will take care of the paperwork, buy your new policy, and help cancel your old insurance.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

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