Some of our customers in Kansas City may be wondering, “Can you trade in a financed car?” Though the answer is yes you can, there are still a few provisions that must be met before you buy a new vehicle. It’s important to know that the loan on your current vehicle isn’t forgiven when your car, truck or SUV is traded. You’re obligated to pay off the remaining balance. So, if you’re considering trading in a vehicle that still has a balance, you will be required to follow a different process than someone whose vehicle is paid for. If you need any assistance, our knowledgeable finance department can help with your needs.
How does trading in a financed car work? To start, if the amount owed on your current car loan is less than your car is worth, then the dealership will purchase your vehicle and pay off the balance of your existing loan. Any difference between the amount the dealership offers and the remainder of your loan will be deducted from the purchase price of your new vehicle.
For example, if your current car loan has a remaining balance of $9,000 and the dealership offers you $10,000 for your car, they will purchase your vehicle and deduct the remaining $1,000 from the cost of your new car.
Some dealerships may choose to pay off the balance of your loan even if your loan is upside down, meaning the amount owed is more than the car’s worth. The process is called “rolling over” a loan. In this case, the remaining balance of the loan (after they assess the value of your trade) will be added to the cost of your new vehicle. Keep in mind rolling over a loan will increase the cost of your monthly payments because you’ll be required to pay the dealership for acquiring the balance of your previous loan.
We hope these car buying tips were helpful on your new vehicle journey. To learn more about your options for trading in a financed car, contact us so we can get you behind the wheel of a new Chevy!
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