How Soon Can You Trade In a Financed Car?

June 15, 2021
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While there is no limit on how soon you can trade in a financed car, whether you should is another matter entirely. If you are considering trading in a newly financed car there are many factors to ensure you are making a smart financial decision. Here are some to consider. 

What if my car is underwater? 

If you want to trade in your recent purchase, the first and probably most important factor is if your car was purchased new. If you are reading this article, I'm assuming you've owned your car for a year or two at most which, might be a problem if you are the first owner. New cars depreciate heavily in the first few years of ownership and depending on the loan and car, you might be "underwater" on your vehicle, or your total loan left is worth more than the value of your car.   

New cars are more likely to be underwater, but that doesn't make used cars immune to the problem. If your car has mechanical problems, has just racked up miles or your loan term length is just long are all factors that can make a car loan go underwater.  

Having an underwater vehicle is tough, if you choose to trade in your vehicle it actually increases the total cost of your next car. Understand that holding onto the vehicle will probably be your best move financially. But we at Car City understand life is tricky and your needs might have changed since you purchased the vehicle, so here's what to do if your car is underwater and you still want to trade it in. 

Trading in an underwater car

  1. Before going to the dealership, look up your remaining loan balance and your car's value on a site like KBB and make an honest assessment on its trade-in value. If you're lucky the car is worth more than you thought. 

  2.  Call your lender, you may be able to get a new rate and skim off some of the total loan amount. If you've been making your payments on time you should have some goodwill with the company and they may be able to work with you.   

  3. Try and pay the loan off quicker. If the difference is not that great, waiting a few months and budgeting more for the loan to at least get even with the loan would be a smart move.  

What if I just want a new vehicle anyway?

Understand that if you trade in your vehicle you'll need to pay the negative difference somehow. Whether it's cash, a new loan, taking a hit on its trade-in value or adding the negative balance on your new loan, you and the dealership will need to come to some agreement. If you need help deciding on a vehicle, read our guide.

What if my loan isn't underwater? 

Then go for it! If your car is worth more than your remaining loan there are no strong reasons to not trade in your vehicle.

We at Car City are no strangers to tricky loan situations so give us a call at (913) 295-9300. You can also apply for financing at our Finance Center.

If you want some options for you, check out our inventory here.

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Once we have received your pre approval credit decision and you have scheduled your contactless test drive with the vehicle you've chosen, Car City Wholesale and CCW Auto Outlet will provide the proper paper work followed by scheduling a good time to deliver you new car and keys to you at your home.