Trading in a financed car that's underwater - what are my options?
I owe $19,000 on my car but trade-in value is only about $15,500. Need a different vehicle (moving to a colder climate, need AWD) but don't have cash to cover negative equity. Can I still trade it in?
21 votes
2 answers
4.1k views
asked 9 July 2024, 8:58 am by Amy F.
Share
Report
2 Answers
sorted by Votes
Best Answer ★
Yes, but be very careful. Dealer can roll negative equity ($3,500) into new loan. You'll be even MORE underwater on the new car. If you must: make large down payment to offset, get gap insurance, plan to keep new car much longer. Better option if possible: wait and pay down loan until not underwater.
Alternative: sell privately instead of trading. You'll typically get $1,500-2,500 more than trade-in, which might close the gap entirely. Coordinate sale with paying off loan, but worth the effort to avoid rolling negative equity.