Can You Trade In a Financed Car?

Yes, you can trade in a financed car, even if you still owe money on it. At Star Motor Cars, we help Katy drivers navigate this process smoothly, whether you’re upgrading to a new model or considering a lease. Read on to learn more. 

How Does Trading In a Financed Car Work?

1. Determine the remaining balance on your loan. It is typically listed on your monthly statement.
2. Use our value your trade tool or one from a service like Kelley Blue Book 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 worth. 
3. If the remaining amount of your auto loan is less than the trade-in offer from the dealership, then you’ll have money left over that will go towards purchasing a new car from the dealer. For example, if you still owe $7,000 on your car in Woodlands, 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 car. 
4. 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.

What Does “Rolling Over” a Loan Mean?

Rolling over a loan is when a dealership says they will pay off your old loan, no matter how much you owe. However, this is too good to be true, as the price gets added to your new loan on the next car you buy, meaning you pay the dealership back for the old loan at the same time that you pay off the loan on your new vehicle.

Trade In a Financed Car For a Lease at Star Motor Cars

At Star Motor Cars, we’ll assist with trading in your financed car. Our Houston finance experts will guide you through each step, ensuring a transparent and efficient process. Whether you’re purchasing a new vehicle or opting for a lease, we aim to make your transition smooth and beneficial. 

Contact us today to schedule an appraisal or to discuss your options. We’ll help you find the best path forward with your automotive needs in Sugarland.