How Does Trading in a Financed Car Work?

Can you trade in a financed car? The short answer is yes. However, there are a few things you’ll need to know before you buy a new vehicle. The first is being aware that the loan on your current vehicle isn’t simply forgiven. You’re obligated to pay off the remaining balance before considering buying a new car, truck, or SUV. Trading in your financed vehicle will also require you to follow a different process than if your vehicle was already paid for. If you need any assistance, our knowledgeable finance department can help with your needs.

Trading in a Financed Car

So, how does trading in a financed car work and how can you get started? Well, if the amount still owed on the vehicle is less than the vehicle’s worth, the dealership will buy the vehicle and pay off the balance of the existing loan. Any difference between the amount the dealership offers and the remainder of your loan will be deducted from the purchase price of your new vehicle.

For example, if the dealership offers you $10,000 and your current vehicle has a remaining balance of $9,000, they will purchase the vehicle and the remaining $1,000 will be applied as a credit to the new vehicle of your choice.

The Process of “Rolling Over” a Loan

It is possible that the dealership will choose to pay off the remaining balance of your loan if the amount you owe on the vehicle is worth more than what they offer to buy it for. This is called “rolling over” a loan. In this case, the remaining balance of the loan (after they assess the value of your trade) will be added to the cost of your new vehicle. Keep in mind that rolling over a loan doesn’t mean that the loan is forgiven. This will be paid back to the dealership while you’re paying off your new vehicle, resulting in higher monthly costs.

Trade-in Your Vehicle at Lexus of Cherry Hill

Value your trade-in at Lexus of Cherry Hill today if you decide you want to sell us your vehicle. If you’re unsure, learn more about your options for trading in a financed car. Contact our team to learn more today about how to refinance a car, gap insurance, and more!

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