Can You Trade In a Financed Car?

If you’re ready to upgrade your vehicle, you may be wondering if you can trade it in without paying off the loan. Trading in a car attached to an outstanding loan is a common practice, and many area dealerships, including Five Star Automotive Group, handle this process regularly, making it easy for you to get a new vehicle or even switch to a lease. So, can you trade in a financed car? The answer is yes! Even if you haven’t fully paid off your current loan, you can still move forward with trading in, giving you flexibility and the chance to drive something new.

How Does Trading In a Financed Car Work?

1. Determine the remaining balance on your loan. It is typically listed on your monthly statement.
2. Use our Value Your Trade tool or one from a service like Kelley Blue Book to get an estimate on the value of your current vehicle. Note that this is simply an estimate, and it’s only once the vehicle has been physically inspected that the dealership will establish what the car is worth.
3. If the remaining amount of your auto loan is less than the trade in offer from the dealership, then you’ll have money leftover that will go towards purchasing a new car from the dealer.
   1. For example, if you still owe $7,000 on your car in , and the dealer offers you $8,000 to buy the car, the loan can be paid off and you’ll have $1000 to contribute towards your next car.
4. If the remaining balance of your auto loan is more than the trade in offer, then you’ll still owe money on your car–this is called negative equity. You can pay off the remainder in full before buying your next car, or you may have the option to roll over the balance into your next auto loan with the dealer.

What Does “Rolling Over” A Loan Mean?

Rolling over a loan is when a dealership says they will pay off your old loan no matter how much you owe. However, this is too good to be true, as the price gets added to your new loan on the next car you buy, meaning you pay the dealership back for the old loan at the same time that you pay off the loan on your new vehicle.

Trade in Your Car at Five Star Automotive Group

When you decide to trade in a financed car, working with Five Star Automotive Group can make the experience smooth and efficient. Our experts will guide you through each step, ensuring you understand how trading in a financed car works and what options are available. We also offer the flexibility to trade in a financed car for a leased vehicle.

Whether you want to upgrade to a newer model or switch to a lease, you can browse our new vehicle specials to find the vehicle to enhance your journeys. Whichever route you choose, we’ll be here to assist you and make the process as easy as possible.

If you’re ready to explore your options, speak with our finance team, then schedule a test drive to get behind the wheel of your next vehicle with ease!