Can You Trade In a Financed Car?

Can you trade in a financed car? Absolutely! Trading in a financed car is entirely possible, and it can be a practical choice if you’re looking to upgrade to a newer model or change your vehicle type. At Rusty Wallis Honda, we help drivers from Garland understand their options for handling a car loan when they decide to trade in their vehicle. If you have any questions about car loans, leasing options, or trading in a financed car, our finance center is here to provide expert guidance and support.

Can You Trade In a Financed Car? How Does Trading in a Financed Car Work?

How does trading in a financed car work? Trading in a vehicle that you still owe money on involves a few critical steps. Here’s how the process generally works:

1. Determine Your Loan Payoff Amount

The first step is to find out the remaining balance on your loan, which is usually listed on your monthly statement. This amount is crucial in determining how to proceed with the trade-in.

2. Assess the Trade-In Value

Use our ‘Value Your Trade’ tool or another reputable source like Kelley Blue Book to estimate the value of your current vehicle. Keep in mind that this initial estimate may change after a physical inspection by the dealership to assess the car’s actual condition.

3. Compare the Remaining Loan Balance and Offer

• Positive Equity: If the trade-in offer is greater than your remaining loan balance, you can pay off the loan and use the surplus towards your next vehicle purchase. For example, if you owe $7,000 and the dealer offers $8,000, you can clear your loan and have $1,000 left over.
• Negative Equity: If your car’s trade-in value is less than what you owe, you’ll need to cover the difference. This situation is often referred to as being “upside down” on your loan.

4. Dealing with Negative Equity

You can handle negative equity by:

• Paying the difference out-of-pocket.
• Rolling over the loan: Some dealers may offer to roll over your negative equity to a new loan. While this can seem convenient, it means you’ll owe more than the new car is worth, potentially putting you in a riskier financial situation.

How Does Trading in a Financed Car Work? What Does “Rolling Over” A Loan Mean?

Rolling over a loan involves transferring the unpaid balance of your current loan to the new car loan. This arrangement increases the total loan amount of your next vehicle purchase, which could result in higher monthly payments or a longer loan term.

Trade-In a Financed Car for Lease

You can also consider trading in a financed car for a lease. This option might be appealing if you prefer lower monthly payments and the flexibility of changing cars every few years without the hassle of selling. Our team at Rusty Wallis Honda can guide you through the process of trading in a financed car for a lease, ensuring you understand the implications and benefits.

Rely on Rusty Wallis Honda for Your Next Vehicle

When you’re ready to trade in your financed car or explore new vehicle options in Dallas, check out our new vehicle specials. Whether you’re in Mesquite or Richardson, our team is ready to assist you. Apply for financing online to streamline your vehicle purchasing process.

Visit us today to explore your options and find out how you can transition smoothly from your current financed vehicle to a new or leased model with the support of our knowledgeable finance experts.