You may be asking if it is possible to trade in a car that has a loan on it. You’re not alone. A lot of motorists in the U.S., Canada, the U.K., and Europe get to a point where they need another car before their loan is finished. Can I Trade In a Financed Car If your situation has changed or you simply want to buy a new one, but you must keep certain things in mind to prevent surprises.

How Trade-Ins Are Included in an Auto Loan

A financed car can be traded to a dealership, even though it belongs to the bank at that moment. The dealer will determine the trade-in value of your car after putting it through an evaluation. If the sale price is greater than your loan, you get to keep the remaining profit after paying back your loan. The cash can help you buy your next car.

Also Read About in Detail: Can I Trade In a Financed Car

When the loan amount is higher than what the car is worth, the loan is in a negative situation. In this circumstance, you can trade the car in, but you will have to pay the difference. A few dealers will add the remaining amount to your new loan, raising your monthly payments and the total amount of interest you pay.

Advantages and Disadvantages of Selling a Car You Are Financing

If you are in a hurry to get rid of your current loan, trading in your financed vehicle can be very easy. There is no need to worry about paying off the loan or transferring the title since the dealer takes care of it. You also have the option to use extra equity toward your next car, helping to bring down the amount you have to pay upfront.

Also Read About in Detail: Benefits and Drawbacks of Trading In a Financed Car

But there are downsides too. Being upside down could mean that you are putting money into the loan above the current value of the car. This result is that the loan balances keep increasing. Dealers usually offer lower trade-in values than selling to a private buyer, so you could be losing out on some money.

How to Know if You’re in Positive or Negative Equity

Make sure you know the balance left on your loan before you go to the dealership. Your lender will let you know what the “payoff amount” is.Then you should find out what your car is worth these days based on its condition and age, using tools like Kelley Blue Book (U.S.), Auto Trader (U.K. and Canada), or Parkers (Europe).

Trading in would be advisable if your car is worth more than you still need to pay back for the loan. Should you be in negative equity, you’ll have to decide if you should move now or wait until you’ve paid down a larger part of your loan. In any case, getting this information ahead of time helps you in your negotiations.

Smart Tips for Selling a Vehicle that You Still Pay For

If you trade in a financed car, research and knowing the right time is very important. First of all, make sure your car’s upkeep is great and clean it well before it is appraised. After that, check different car dealerships to see which one offers the best trade-in price. By doing this, you can be sure you are not missing out on any savings.

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You should make sure to review the details of your loan. If you want to settle the loan before it is due, some financial institutions may charge you a prepayment penalty. Should you be wondering, make sure the repayment terms still suit your situation if you’re putting negative equity into your new loan. It can be tempting to choose a lovely new car, but you have to make sure the costs are right for you.

Is It Possible to Sell a Financed Car for Another?

Is it possible to trade in a financed car? Sure, this is possible, but it will depend on if you can afford it. When you are in positive equity, taking advantage of a good deal could make sense. If not, it might be a good idea to wait, or you can try selling the car privately or getting a different loan.

Ultimately, being informed is key. You shouldn’t decide to trade your financed car before you give it some serious thought. If you plan your finances and understand how much the car is worth, you can buy the best car without putting stress on your budget.

Ready to make a move?

If you want to trade in your financed car, make an effort to do your homework, get different quotes, and consult a reliable dealer or financial advisor. Would you like to find out similar suggestions? Sign up for our newsletter to get advice that supports your specific requirements for buying a car!