How to Trade-In a Car That’s Not Paid Off
Can you trade-in a car that’s not paid off? In short, absolutely! You can certainly trade in a currently financed car — but it’s important to keep in mind that the remaining loan balance on your vehicle doesn’t go away because you’ve traded it in, you’ll still need to pay it off. For folks around San Jose, there’s a couple paths to take in this scenario, and today Victory Honda of Morgan Hill we’ll be learning more about your options for trading in a car that still has a loan balance. If you live around Morgan Hill and have any questions about car loans, interest rates, selling a car, or leasing a car, get in touch with the experts in the Victory Honda of Morgan Hill online finance center.
Trading In a Financed Car? Here’s What to Do.
- You’ll first need to determine the remaining balance on your current vehicle’s loan. It is typically listed somewhere on your monthly statement.
- Next, use our simple Value Your Trade tool 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 truly worth.
- If the remainder of your auto loan (from step 1) is less than the trade in offer from the dealership (from step 2), then you’ll actually have money leftover that will go towards purchasing a new car from the dealer. (For example, if you still owe $7,000 on your car 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 Sunnyvale cruising machine.)
- However, 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. We’ll talk about that more, next.
“Rolling Over” a Loan: What Does It Mean?
Rolling over an auto loan is what happens when a dealership says they will pay off your old loan no matter how much you owe. While this will certainly get you back on the roads of Watsonville, it can also be too good to be true, as the price gets added to your new loan on the next car you buy. In short, this means paying the dealership back for the old loan at the same time that you pay off the loan on your new vehicle, resulting in a higher financed amount and possibly higher payments.
Come to Victory Honda of Morgan Hill for Your Next Honda.
Whether you’re ready to trade in a financed car or get behind the wheel of a new Honda, be sure to check out our new vehicle specials in Morgan Hill. If you’re trading in any vehicle, check out our handy guide on getting the most out of your trade-in. Once you’re ready to begin the process, you can easily apply for financing online!
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