Blog / Buyer's Guide

How to Trade-in a Car That Has a Loan

Man showing woman car paperwork

Trading in a vehicle that still has an outstanding loan might appear daunting, but it can be a smooth experience if you follow these steps: 

1. Know Your Loan Balance 

Begin by reaching out to your lender to obtain your loan payoff amount. This figure represents the total needed to settle your loan, which may include any fees or interest that have accumulated since your last payment. 

2. Assess Your Car’s Trade-In Value 

Next, look up your car’s trade-in value using tools like Kelley Blue Book or Edmunds. This information will give you an idea of what the dealership might offer for your vehicle. 

3. Calculate Your Equity 

Subtract your loan payoff amount from the trade-in offer. If your car’s value exceeds your loan balance, you have positive equity that can be used toward your new vehicle purchase. Conversely, if your loan balance is higher than the trade-in value, you’ll face negative equity, meaning you’ll need to pay the difference. 

4. Explore Your Options with the Dealership 

Many dealerships can manage loan payoffs for you. If you have positive equity, it will lower the price of your new car. If you have negative equity, the dealership may incorporate the remaining balance into your new loan, which could raise your monthly payments. 

5. Finalize the Trade-In and Purchase 

Once you agree on the terms, the dealership will take care of the paperwork, including settling your current loan. Make sure to review the contract thoroughly to confirm that all details are correct. 

Trade In Your Car Today at Bruner Motors! 

Many times dealers will have additional incentives for certain makes and models to help you get out of your current vehicle. There are additional tax savings for trading in your vehicle vs selling it yourself. For example, if you trade in a vehicle with $5000 in equity it will reduce your new car taxable amount by $5000. Whereas if you sell your vehicle yourself you would pay taxes on the entire amount.

At Bruner Motors, we simplify the process of trading in your vehicle with a loan. Let us manage the details while you concentrate on selecting your next car. Visit us today to begin your journey and drive away in a vehicle you’ll adore! 

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