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How do I trade in my car if I still have a loan on it?
I've been paying my car loan for about four years, but I want to upgrade. How do I trade in my car if I still have a loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Trading your car in if you still have a
car loan
may seem counterintuitive, but it happens all the time. In fact, the process is rather straightforward.You basically have three options to get rid of your current car:
- Sell the car privately and pay off your current loan
- Trade the car in and pay off the reminder of the loan with cash
- Trade in the car and roll over your old loan into a new one
Since you’ve specified trading in your car, just contact a dealership. They will take your car and pay off a portion of your remaining balance equal to your car’s value.
If you owe less than the car is worth, you’ll trade in your car, all the remaining balance will be paid off, and you’ll get to pocket the difference between your car’s value and your loan balance.
If you still owe more than the car’s worth, though, you’ll have to pay the remainder of the balance in cash or roll the existing balance into a new loan.
After the trade-in, the next thing to do is find your new car—and get it the right car insurance.
Jerry
lets you compare rates and helps cancel your old policy and switch to a new one. It doesn’t get much easier than that.View full answer
- Gregory R.
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