Can you trade in a car worth more than the car you are buying?

While you can trade in a car worth more than the one you are buying, it only makes sense to do so if you don’t still owe more for the car than it’s worth.

What happens when your trade in value is more than what you owe on your car?

If your car’s trade-in value is more than your current loan balance, then you’re all set—you can just pay off the old loan and apply the difference toward the cost of your new vehicle. But if you owe more on your car than its trade-in value, then you’ll have to make up the difference.

Can you part exchange a car of higher value?

It is entirely possible that you can part exchange your car for a cheaper one. If the car you are part exchanging is worth more than the one you are buying, and the finance is fully paid off, you are often able to use your outgoing car as a full payment for the new one and we’ll give you any difference in cash.

How soon is too soon to trade in a car?

If the vehicle is new, you should ideally wait until at least year three of ownership to trade it in to a dealership, as this is when depreciation normally slows down. If it’s used, it already went through the big drop in depreciation and you can usually trade it in after a year or so.

Is it better to trade in a car you own outright?

If you still owe money on your old car, you probably still can trade it on a lease — if it’s worth more than you owe. But as with buying, “it’s better to trade in a vehicle you own outright than one you owe money on,” McBride said. “You have less equity, so the value of your down payment is going to be much smaller.”

How much is my car worth at trade-in?

The exact figure depends on the make and model. Some vehicles hold their value better than others and will fetch a higher price at trade-in. The condition of your vehicle also contributes to its trade-in value.

Can you trade in a financed vehicle for a new one?

If you’re trading in a financed vehicle, and you have positive equity, the dealership will cover the rest of the loan and subtract the equity from the price of the new vehicle. If the new vehicle costs less than the total equity you have in your current car, the dealership will provide a check to cover the difference.

What happens when you trade in a car at a dealership?

How trading in a car works When you trade in your car to a dealership, its value is subtracted from the price of the new car. When you trade in a car with a loan, the dealer takes over the loan and pays it off. The dealer is also supposed to handle the paperwork, such as the transfer of the title, which establishes legal ownership of the vehicle.