Can You Trade In a Car When You Still Owe Money?

If you’re looking to upgrade your vehicle before paying off your existing loan, you’re likely wondering if trading in is possible. Luckily, you can trade in a vehicle with an active loan, as dealerships factor your remaining balance into your trade-in value calculation. Here at Audi Silver Spring, our finance professionals explain how you can complete a trade-in with an active car loan.

How the Trade-In Process Works with an Active Loan

The process to trade in a financed vehicle begins with requesting an official 10-day payoff quote from your current lender. The dealership then will appraise your car’s physical condition and compare its market appraisal against your remaining loan balance. If your vehicle is worth more than you owe, the positive equity reduces your new vehicle purchase price. On the other hand, if you owe more than the appraisal value, negative equity can sometimes be rolled into your new financing plan.

Determining the Pros and Cons

Dealing with a trade-in with an existing loan balance has both advantages and disadvantages. A major pro is that completing this process streamlines loan payoffs into a single transaction, provides potential sales tax savings, and eliminates the hassle of selling the car privately. Conversely, cons include the fact that carrying negative equity increases your new monthly payments and inflates total interest costs over the life of your new Audi loan. No matter which path you decide to take, the friendly team at Audi Silver Spring is here to help.

Value Your Trade-In at Audi Silver Spring

Whether you want to trade in a car that you still owe for or trade in a paid-off car, you can do so at Audi Silver Spring. You can even obtain an estimated trade-in value right here on our website. Visit our friendly showroom to get started on the process!