How to Trade in a Car With a Balance on It

How to Trade in a Car With a Balance on It
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Trading in a car with a balance on it is often a costly undertaking, though it can be done. You will still be financially responsible for the outstanding balance on the loan. However, a new loan that incorporates the old one can result in more financially advantageous terms, particularly if your new loan carries a lower interest rate.

Find out the current value of your vehicle using a site like Kelley Blue Book or This gives you greater negotiating power. For example, if you owe $5,000 on your car, but the trade-in value is $6,000, that extra $1,000 can be factored in when negotiating a price on a new vehicle.

Decide how much you want to spend for a new car, factoring in the outstanding balance on the old one. For example, if you owe $5,000 on your current car and can only afford payments on a $20,000 loan, you’ll have to look for a new car with a price tag of $15,000 or less. This factors in the car price plus the outstanding loan balance you’ll be tagging on to your new loan.

Tell the car salesperson you’re working with that you’re carrying a balance on your existing vehicle that you want to roll into a new loan. This will help the dealership’s finance department when it comes time to qualify you and negotiate your loan.

Stick to your guns and be firm when maintaining your financial objectives. Be prepared to walk away if you can’t reach a price you’re comfortable with.


  • If your car is worth more than you owe on your loan balance, consider selling it rather than trading it in and use the proceeds for a down payment on your new vehicle.

    Check out auto loans from a bank or credit union before going to a car dealership. You might get better rates and terms.