Can You Trade In a Financed Car?

Couple looking over paperwork in a dealership
 

If you’re currently paying off a car in the Carmel area but you want to trade it in for a new vehicle, you’re in luck! It’s absolutely possible to trade in a financed car for lease or purchase, but there are a few caveats to be aware of. For one thing, you’ll still be on the hook to pay off the remaining balance on your current vehicle after you’ve traded in. The finance team at Penske Honda has everything you need to know about the process of trading in a financed car in the guide below. So, if you find yourself asking “Can you trade in a financed car?” read on!

How Does Trading In a Financed Car Work?

So, how does trading in a financed car work? It’s easier than you might think! Just follow these steps and you’ll be all set:

  1. Consult your monthly statement to determine how much money you still owe on your current vehicle.
  2. Estimate the trade-in value of your current vehicle. You can do this via our Value Your Trade tool or by using a third-party resource like Kelley Blue Book. This should give you a good idea of how much your vehicle will go for, but keep in mind that it’s only an estimation.
  3. If your trade-in is worth more than the amount you still owe on it, this means you’re in positive equity and will have money left over after trading in. For example, if your car is worth $10,000 and you only have to pay off $8,000, you’ll get an extra $2,000 to put towards your next Fishers ride!
  4. If your trade-in is worth less than the amount you still owe on it, you’re in negative equity, and will still have money to pay off once you’ve traded in. From here, you have a few options: you can either pay the remaining amount off in full before you buy your next ride, or you can roll over the balance into your next loan. We’ve got more information on this option below.

What Does “Rolling Over” A Loan Mean?

When trading in a financed car with negative equity, you have the option of rolling over your loan. When you roll over a loan, the dealership pays off the amount you owe on your old loan and adds that amount to the loan on your new vehicle. So, if you owed $2,000 on your trade-in and you owe $10,000 on your new vehicle, you’ll now owe a total of $12,000. This is a perfectly viable option for many drivers, but you should carefully consider your financial situation before making any decisions. 

Find Your Next Ride at Penske Honda

Now that we’ve answered the question “Can you trade in a financed car?” you might be ready to start looking for a new vehicle. If you want to trade in a financed car for lease or purchase in the Westfield area, be sure to check out our online inventory to see what we have available! You can also contact us with any questions or for more information about trading in a financed car.

 

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