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Can you Trade in a Financed Vehicle? 2023

Can you Trade in a Financed Vehicle 2022

Can you Trade in a Financed Vehicle? 2023

You can trade in a car while there is still finance owing, though it’s important to understand everything involved with the process before going ahead, to ensure it is the right decision for you. 

It can depend on the type of car loan you have, as to how easy the process may be to trade in your vehicle with finance still owing. 

Trading in your car can be exciting if you’re looking at getting a bigger or newer car, however, if you’re still repaying your car loan, there are numerous things to consider. 

Check with your lender

It is generally best to check with your lender before trading in a vehicle that still has an amount remaining to be paid off. They may be able to explain your options. 

If you have a secured loan, you’ll need permission from your lender to trade your vehicle in. With a secured loan, the car is used as security for the loan in the event of a payment default. 

This means that ownership of the car remains with the lender until the car loan is paid off. If your car is collateral for your loan and is partly owned by the lender, it cannot be sold or traded in without paying the lender. 

If you have an unsecured car loan, in which the vehicle is not held as collateral for the loan, it may be a simpler process of trading in your car even with finance owing. 

Keeping your lender in the loop throughout the process of trading in your car will help you to avoid any issues. 

What to consider

Before trading in your vehicle, there are a few things to consider first, to help you make the right decision for your needs, and budget.

You should know how much you owe on the car loan before trading in your vehicle. If you still have a substantial amount left to pay off your loan, it may not be the best time to trade in your car unless you’re trading in for a more affordable vehicle to reduce your loan amount. 

You may be susceptible to paying exit fees as well as other costs, for trading in your vehicle before the loan is paid off. Make sure to check this first, so you know what costs to expect. 

Can you Trade in a Financed Vehicle

If you’re trading in a financed car, you need to discuss your situation with the car dealer. This can help determine if your car’s trade-in value will cover the cost of your remaining loan balance. You want to ensure you’re getting a good deal on your trade-in value. If you’re selling to a dealer, keep in mind it may be challenging to negotiate the trade-in value. 

One advantage to trading in a car with finance still owing, is that you could trade for a car with a smaller loan at better rates. Though be careful you don’t end up with a bigger loan and higher interest, as if you don’t get the price you’re after, you may end up in a worse financial situation. 

Make sure it’s the right choice for you before moving ahead, as there may be more suitable alternatives such as refinancing your existing loan to one with better rates, rather than trading the car in. 

Trading in your vehicle

If you’re thinking of trading in your vehicle for an updated model, or perhaps downgrading to a more cost-effective option, do your homework to make sure you know what’s involved. Ideally, you may want to check if you can pay off your loan before upgrading to a new car. This can help save you in exit fees, and make it easier to get a new car. 

If you’re trading in your car at a dealership, be upfront about how much is remaining on your loan. The dealership may be able to communicate with the lender about any outstanding finance. 

Can you Trade in a Financed Vehicle? 2022

When trading in a vehicle with finance still owing, it can be a complex process so make sure to talk with your finance specialist or lender. There may be some cases in which the new lender has to make a payment to the dealer and one to pay out the previous contract. Also make sure to have your documentation organised, such as car identification details and financing information. 

Contact the team at 360 Finance for more information on car finance. 

If you still have a loan on the vehicle you want to trade in, you should take steps to carefully assess whether it is in your best interest to take on new debt for another car before paying off the old one.

Can you Trade in a Financed Vehicle

Find out how much you still owe on your current vehicle. Get the total settlement amount from your lender. It is the amount you will have to pay to pay off the entire existing loan, which may differ from the outstanding balance shown on your statement or coupon book. This difference may be due to a prepayment charge or the way interest is calculated
Find out how much is the value of the vehicle you want to give up so that you can know if the amount you still owe on that vehicle is less than said value, be sure to evaluate during any negotiation that you are receiving a fair valuation of the car you want to give up, and that you can fully pay off the old loan.
Decide if you will pay off your existing loan in total now, wait until you pay off your old loan before borrowing for another vehicle, or include the amount you still owe on the current vehicle in your new car loan.
If you owe more on the current vehicle than it is worth, and you refinance the current loan balance into the new loan, you could make your new vehicle loan much more expensive than expected. The total cost of the loan will be higher because you will be borrowing more than the total price of the vehicle.

If you decide to refinance your current loan balance and include it in the new loan:

Find out which department of your existing lender you should contact to confirm that the old loan is paid off once the new loan is arranged
After a week or so, use the contact information to find out if your old loan has been paid off
If the loan has not been paid off, contact the lender. If the loan has not been paid in full after you have made the necessary efforts, consider filing a complaint with the Federal Trade Commission or the CFPB online or by calling our toll-free number: (855) 411-CFPB (2372 ). You may also report your experience without filing a formal complaint. You can also contact your state attorney general.


Research your trade-in value to see if the amount you still owe on your old car is more or less than its value. Then, during any negotiation, you can decide if you’re getting fair value for your trade-in and if you’re capable of paying off your old car loan in full.

If the amount to pay off your loan is more than the dealer is willing to pay you for the vehicle you want to trade in, you will still have to pay what you owe on the old car, even if you trade it in. Think carefully about whether it makes sense to go ahead with the new purchase because, in this circumstance, the new loan will include the amount you still owe on the old vehicle, plus the amount you’re borrowing for your next car. You should be very vigilant and make sure you understand the total cost of the new loan, the monthly payments, and the term of the loan (in months) before agreeing to any agreement.

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Can you Trade in a Financed Vehicle? 2022

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