Can I trade in a car I am still making payments on for a new car?

Answer 1

Of course. But when the dealer takes your car, they have to pay off the loan, so remember that your net proceeds from the trade is what the dealer gives you LESS what you still owe. For example:

Value of your car at trade in: $5000
What you owe: $2000
Value of the trade in that you can apply to your new car: $3000.

Consider selling the car yourself though. You can almost always get more through a private resale than you can through a trade in. You also contain far more control over the situation that way.

And the final thing to keep in mind. A dealer may offer you what you think is a great trade in value for your old car, but they make up for that by refusing to discount that much money from the new car you're buying. So if you split the transaction in two (1 - you buy a new car and 2 - you sell your old car privately) then you have more control over the situation.

Good luck.

Answer 2

In most cases the answer is yes. The hardest part is finding a lender that will be willing to finance the transaction. I've traded in 3 previous cars that I was still making payments on. In my circumstances I was always "upside down" meaning I owed more on the car than it was worth. The dealer will pay off your existing loan and add the negative equity to the price of the car you are purchasing.

Everyone has their opinions of car dealers and how unscroupulous they are. If I don't feel I'm being treated fair, I go somewhere else. That being said you do have to understand that in most cases dealers are only going to give you the wholesale value of the car. This is the price they can obtain the same make and model car at auction. They will not give you more for your car just because you want more. I've used some finese and scored a couple of hundred dollars more than the auction price but you have to go in realistic. Keep in mind that I don't have a Lexus or BMW so most economy/mid-size cars are going to see a fair amount of depreciation.

I like driving a new car every year or so and that's the price I have to pay. As long as you are willing to drop a couple of thousand on a down payment and don't mind a higher monthly payment you Can definitely do it. For those reading and wondering why I don't lease, I tried leasing and it didn't work for me. With the lease you are locked in for the length of the contract...no exceptions.

At 26 yrs old, I have learned that unless your car is actually falling apart or totally unbearable I would stick it out as long as possible. Now that I have a house I realize there are so many better ways to spend money.

Answer 3

If you ask twice, you get better answers. Oh, never mind, you already did that. Please delete one of them.

If you are still making payments you don't own the car, you are merely the registered owner. Can you trade in something you don't own? Surprisingly yes. Some dealers will take the amount you still owe and add it to the price of the new car you want to buy, and then subtract the trade in value you get from the old car. Most of the time this is something you really don't want to do. You will wind up owing far more than the value of the vehicle through most of the new loan, and if you happen to total it, the insurance will only give you the value and you are left with the balance owed that the bank is going to want.

Answer 4

The complete answer will depend on how much you owe on your old car versus how much it's worth. Here's an example.

Let's say you owe the bank $8500 on your old car, but you can sell it for $10,000. The difference -- $1500 -- is called your equity. If you sell the car, you could use that $1500 as part of the down payment on your new car.

Now let's say it's the other way around -- you owe the bank $10,000 but you can only sell it for $8500. You have what is called a "negative equity" in the car. This is sometimes called being "upside down."

If you have equity in your old car, any dealer will accept it as a partial (or full) down payment on your new car, and will finance the difference. So in the first example, where your old car had an equity of $1500, let's say you trade it for a $15,000 car. The dealer will consider the trade-in to be a 10% down (ten percent of $15,000 is $1500).

In the second example, you may find a dealer who will let you trade in the old car, but be careful -- they're not doing it to be nice to you, they're doing it to get money. Some dealers will take the "negative equity" in a trade -- that is, the difference between the money you owe the bank and the trade-in's actual value -- and add it to the amount they finance on your NEW car.

So in this case, let's say you have that $1500 negative equity in your old trade and you find a dealer who finances a $15,000 car for you. The terms of the loan will say that they are financing $16,500 ($15,000 + $1500), and your monthly payments will be based on that.

The thing to remember is that all car salesmen, even the nicest and most honest of them, spend all day every day thinking about ways to get more money on each transaction. They are very, very good at it, and they will pursue every possible means open to them to get the most out of every sale they make.

Answer 5

As long as you pay off the loan or the dealer you trade in to does. Make sure the dealer is willing to give at least what you owe if not more. Watch out for dealers who "wash" an amount of the money into the price of the new car. Example if you owe 5000 and the dealers says they will give you 3000 you are 2000 in the hole. (dealers call this "upside down") Some will try to get you to let them add that 2000 to the purchase price of the new car and pay off your existing loan. Unless the car you have is really bad either wait till you owe less or put down a bigger down payment.

Answer 6

I would only do it if they will give you more than you owe on the car. That way, you have some kind of down payment and it won't raise the payments.
I traded in a car I owed $2000 on and they gave me 4500 for the trade in. So I got 2500 as a down payment. Everyone on here is worried about getting "screwed" by the dealer, but if you just go to a reputable dealership this won't be a problem. Just be willing to walk away and use your head. I certainly didn't get screwed. with the $2500 down, I qualified for the special financing.

Answer 7

Yes. But be careful. The dealers are sometimes unscupulous. They will add the price of the trade payments to the new car. You might get scammed if you're not watching them.
In actuality, you don't own the vehicle; the bank does. So the dealer would have to use the money you pay in to pay the bank for the car.

Answer 8

You can but I would say DON'T DO IT

The car lot that you are going to buy from will be more than willing to 'help' you out with what you are requesting. What will happen is they will pay off your exisiting loan and tack it onto the new loan for the new car. This means that you are paying for 2 cars, one of which you do not have. It also means that you will need special insurance(more expensive) that will cover your car for more than it is worth so if it gets totaled the bank will then receive all the funds they would be out.

Answer 9

ya take it in for a trade in when they ask for the title and see if you still owe on it they just get you take out a bigger loan for a new car. your payments will be higher cuse you owe more and if the vehical that you are trading in is not worth alot they still take it and pay off your loan but you still have to pay it off ontop of your new loan

Answer 10

ask the bank your making payments to