Will a car dealership pay off my old car loan?

I want to trade my old car in for a new car, but I haven’t finished paying off my car loan yet. Will the dealership pay off my loan?

Answer
Good question! When you trade in your old vehicle and get financing through the car dealership, most dealers will pay off your car loan —but that doesn’t mean you’re in the clear yet.
During a trade-in, the dealer gives you trade-in value for your car and pays off the remainder of your loan. However, if the trade-in value doesn’t cover the entirety of the original loan, the dealer will roll over the remaining amount into a new loan.
For example, if you get a trade-in value for your car of $8,000 but you owe $10,000 on your loan, you’re short $2,000. The dealer will pay off the loan, but they’ll add $2,000 to the balance of the new loan.
If you trade in your new car, you’ll also want to make sure you make the right moves with your car insurance. While you can simply switch your car insurance over, buying a new car is a golden time to shop for new car insurance. To easily find the best deal on the coverage you need, check out the Jerry app. We’ll get you personalized quotes from top insurers, so that all you need to do is pick the plan that works best for you.
Best of luck with the trade-in!
Eric Schad
Answered on Dec 13, 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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