Can You Trade In a Financed Car?

In short, yes! You can trade in a financed car, but it’s important to keep in mind that the loan on your vehicle doesn’t simply vanish because you’ve traded it in. The balance still needs to be paid off. Once you learn more about your options for trading in a car that still has a loan balance, make your way to our finance center in Lee's Summit to talk over car loans and interest rates, selling a car, leasing a car, credit scores, and much more! We’ll have you on Raytown roads in your favorite new vehicle in no time.

How Does Trading In a Financed Car Work?

1. It’s important to check out your monthly statement to determine the remaining balance on your current loan.
2. You’ll want to get an estimate on the value of your current vehicle. Do this by using our Value Your Trade tool or one from a service like Kelley Blue Book. 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.
   1. For example, if you still owe $7,000 on your car in Raytown, 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, you’ll still owe money on your car. This is called negative equity. You’ll still need to pay the remainder of the loan off before buying your next vehicle or you may have the option to roll over the balance to your next loan.

What Does “Rolling Over” A Loan Mean?

Rolling over a loan is when the dealership says they will pay off the old loan no matter how much is still owed. This may sound too good to be true, and it is. The balance doesn’t just disappear. The price gets added onto your new loan on the next car you buy, meaning you pay the dealership back for the old car loan at the same time that you pay off the loan on your new vehicle.

Finance a New Vehicle with Luther Mazda of Lee's Summit

Once it’s time to trade in a financed car for lease, or get behind the wheel of a new Mazda model, check out our available new vehicle specials to save even more. Not sure your next move? Contact our finance team with questions, to learn more about leasing a new vehicle, the Mazda CX-5 trim levels, to find out the difference between a coupe and sedan, how much gap insurance is, or even to ask about our 90 in 90 out guarantee, then apply for financing online!