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How can you trade a car that is worth less than the balance of the loan?


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Wiki User
2015-12-28 00:53:17
2015-12-28 00:53:17

One thing to keep in mind is a lease, most new cars are allowed to finance more than the new car is worth I.E. our dealership can finance 115% of the new cars MSRP note that you can by a car well below MSRP there for hiding your neg balance keep in mind this is carried over into the next loan so you dont get out of it only refinance it

Answer

No, banks won't just let you out of a loan and take the car back, they wouldn't make any money that way. If you owe more than the car is worth, then it isn't worth selling or trading. You should pay off the car as soon as possible or at least pay it down to the value.

Consider refinancing for a shorter period through a credit union and make sure you are getting the lowest APR on the loan.

There are an additional two ways to possibly fix this issue: by getting a short term job to earn enough money to buy it down to the current value and by keeping the car in excellent repair and reducing the number of miles you drive it. Eventually the value will match.

In the future, do not buy a car with a loan that lasts more than three years, and consider a recent year used car. This prevents the new car out of the lot loss and you pay down the loan faster.

Related Questions

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You can trade your car in, however the loan balance must still be satisfied.

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yes, they buy out the loan, and if the vehicle is not worth what is owed the balance can be added to the amount being finaced on the new one

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yes you can trade it in. But if you owe more than what the dealer is going to give you for the car the remaining balance will be added to your new loan

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Yes. You must pay off the loan with the proceeds, and pay the difference if the proceeds are less than the loan.


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