Can You Trade In a Financed Car?

Excited Couple Reviewing Trade in Offer with Salesman

It’s a scenario that’s not uncommon for drivers across Jackson, WY: your current car no longer meets your needs and it’s time for a new one — but you still owe money on the loan. So, can you trade in a financed car for an upgrade before the end of your loan term? Actually, many dealerships will allow you to do exactly that.

Keep in mind that trading in a financed car doesn’t mean you can avoid paying off the rest of your loan. Rather, your dealership can put the value of your current vehicle toward the cost of your new car, and add any remaining unpaid amount to the new loan. In the guide below from the BMW of Idaho Falls finance center, we’ll get into the details of how trading in a financed car works — so you can decide if it’s the right path for you.

How Does Trading In a Financed Car Work?

Trading in a financed car is a fairly routine process, so your dealership can usually help you move through it quickly. That said, the amount you owe on your current loan may impact whether or not it’s a good idea to move forward. Here’s what you need to know:

  1. First, determine exactly how much you owe on your current car loan. The number should be clearly visible on your most recent monthly statement.
  2. Using our trade-in value calculator or other reliable resource to estimate used car values, such as Kelley Blue Book. Only an in-person estimate can provide an official value of your vehicle, but it’s helpful to have a figure in mind so that you can be confident that your dealership’s offer is fair.
  3. If you owe less on the vehicle than it’s currently worth, trading in a financed car won’t cost you anything! You can simply apply the extra money toward a new or used vehicle in our inventory.
  4. Some Bozeman, MT drivers may prefer a lease rather than another loan. Can you trade in a financed car for a lease? You can — and as long as you have positive equity, you can expect many of the same benefits of trading in a financed car for another financed car, including a lower down payment.
  5. If you owe more on your car than it’s current worth, you have what’s called “negative equity” on your loan. This may make trading in a financed car a bit more complicated, but your dealership can work with you to make it happen! You may be able to use the trade-in money to pay off a portion of your loan, and then “roll over” the remaining balance into a new car loan.

What Does It Mean to “Roll Over” A Loan?

As we mentioned above, you may be able to add the outstanding balance of your old loan to your new car loan. So, how does trading in a financed car work when you have negative equity? As long as you can prove to your dealership or lender that you are able to keep up with the monthly payments, trading in a financed car is possible even when you’re underwater on your current car loan. You may also want to trade in a financed car for lease in order to access a lower monthly payment amount.

Ask us Anything About Auto Financing at BMW of Idaho Falls

If you need expert auto financing and leasing advice, look no further than our dealership in Idaho Falls! Our goal is to put you behind the wheel of a new or used BMW that you love to drive in Butte, MT — at a price that you can feel confident about. Browse our new vehicle specials for more opportunities to save, and be sure to reach out if you have further questions about how trading in a financed car works, how to trade in a financed car for lease, and other car-buying topics


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2200 West Sunnyside Road • Idaho Falls, ID 83402

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BMW of Idaho Falls 43.468370, -112.055720.