Can You Trade in a Financed Car?

When you’re weighing your options for how to get into a new car, you may find yourself thinking, “can you trade in a financed car?” The quick answer is: Absolutely! As you consider trading in a financed car, keep in mind that the balance on your current loan doesn’t go away because you’ve traded it in. Read on with Mercedes-Benz of Princeton finance center to learn how trading in a financed car works. If you have questions about car loans, interest rates, and how to trade in a financed car for lease, don’t hesitate to contact us today!

How Does Trading In a Financed Car Work?

If you have your eye on a new Mercedes-Benz model, but you’re still under a lease, you’ll find that trading in a financed car to a dealership is a pretty straightforward process. So, how does trading in a financed car work?

1. Take a look at your latest monthly statement to determine what the remaining balance on the loan is. 
2. Get an estimated value of your vehicle by using an online tool like our Value Your Trade tool or a service like Kelley Blue Book. Keep in mind that these tools only give you an estimate. Once you stop into a Hamilton-area dealership, the interior and exterior condition will be evaluated by a technician to establish what your vehicle is worth. 
3. When trading in a financed car, you may find that the amount of your auto loan is less than the trade-in value from the dealership. This means you’ll have money left over that can go towards the purchase of a new vehicle. Take a look at this example:
1. Say you still owe $7,000 on your car, but the dealer offers you $8,000 to buy the car. As the loan is paid off, that’ll leave you with $1000 towards the purchase of your next car. 
4. The opposite could be true when trading in a financed car. If it’s determined that the remaining balance of your auto loan is more than the trade-in value, this means you have negative equity, and you still owe money on your car. From there, you can pay off the remaining amount in full before the purchase of a new vehicle, or some dealerships offer the option to roll over the balance into your next auto loan. 

What is “Rolling Over” A Loan?

If you’re trading in a financed car for lease, you may end up owing more on your loan and should consider rolling over a loan. A roll-over loan means that the dealership agrees to pay off the remaining balance of your old loan, no matter how much you owe. Yet, that balance doesn’t go away. The price the dealership paid gets added to your new loan on the next car you buy, so you’re paying the dealership for both the old loan and new loan at the same time. 

Turn to Mercedes-Benz of Princeton for Your Car Buying Questions

Take the worry out of wondering about, “can you trade in a finance car?” or “how to trade in a financed car for lease.” The team at Mercedes-Benz of Princeton is dedicated to providing you with a stress-free car buying and selling experience. To help your search for a model you love, compare the differences between CPO and used vehicles, or take a look at our national offers.