What happens to my car loan if I trade in my vehicle?

I want to finance a new car, but I still have a balance on my old loan. I have positive equity on the loan. So what can I do?

Answer
Congrats on your soon-to-be new car! As far as your old car loan goes, don’t stress out. Since you have positive equity, the trade-in process should go smoothly.
When you have a car loan on a vehicle that you want to trade in, here’s what the dealer will do:
  • Assess the trade-in value of the vehicle and take it
  • Pay off your old loan
  • Give you the difference between the trade-in value and the loan balance (if applicable)
Since you owe less than the vehicle’s worth, you can expect to receive a nice check from the dealer. Use that money for a down payment on the new loan—or take yourself on a nice trip. (We won’t judge.)
Just remember that insurance usually follows the car, not the person, so you’ll likely have to adjust your policy when you get the new car. Jerry can help you compare competitive quotes from up to 50 top providers to find the best rates available.
Eric Schad
Answered on Oct 28, 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.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.
Let Jerry’s experts help you find savings on your car insurance!
No long forms or spam · Get quotes from 40+ carriers
Find insurance savings (100% Free)
rating primary
4.7/5 Rating on App Store