THIS is how soon you can trade in a car after buying it [2022] – Updating

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Reading THIS is how soon you can trade in a car after buying it [2022] – updating 2022

Updated April 25, 2022

Can a financed vehicle be traded in? Of course it is.

However, you should be aware that exchanging a financed vehicle would not remove the credit. You are still responsible for the balance. Most dealerships will give you several options depending on whether you have positive or negative equity and how you want to redeem a vehicle with a credit balance.

Can you trade a financed car?

Yes. Even if you have already paid off the loan for your vehicle, you can exchange it for a new one. The person who takes your car from you gives you money for it, just like any other trade-in.

In some situations, the lump sum would cover the outstanding amount of your debt, and you might even get a little extra to use on your next purchase!

But first you need to figure out how much equity you have in the car. Equity is the difference between the current value of your vehicle and the balance you owe on your debt. Based on these two variables, which we’ll discuss soon, you have positive or negative equity.

How long do you have to wait to trade in a financed car?

A financed vehicle can always be traded in, but for a new vehicle you should wait a year or so. Cars depreciate in value over time, and a brand new car loses 20% or more of its value in the first year of ownership and steadily more in subsequent years.

Depending on how much your down payment is and how quickly your car is depreciated, you could almost immediately find yourself in a situation where you have negative equity on the vehicle.


Understand positive and negative equity

You have negative equity on your car loan, also known as “upside down” or “under water,” when your vehicle’s value is less than what you owe on it. You must bridge the gap between the debt balance and the trade-in value by trading in a car with negative equity.

If you are planning to trade in a car with negative equity, you need to figure out which choice is better for you.

Consolidate your negative equity into a new car loan

While this option may seem simple, it adds to the cost of the current loan, which means you may end up paying more interest on the loan. This decision usually involves borrowing more money than your new vehicle is worth, putting you at greater risk of going back into debt.

Pay the difference between the amount of your trade-in and the amount you owe.

You can afford the difference between what you owe on your new debt and what the agent will pay you for your trade-in if you have the cash on hand. This will help you reduce the cost of getting a new loan.

Postpone the trade-in

You may want to wait until you’ve paid off your loan or are out of debt before selling your car.

Positive equity

The positive difference between the value of your vehicle and the balance due on your loan is called positive equity. Let’s say your car is worth $8,000 in trade-in and you owe it $4,000. You now have $4,000 of equity to use towards the price of a new vehicle.

This value is excluded from the agreed quantity of the current car. You can pay a down payment to lower the total amount of the lease, apart from the equity being added to the new car purchase.

However, you will need to fund the remainder of the car’s selling price, either in cash or with a car loan. The trade-in amount will be included in the quote for your new vehicle. Check that you are getting the exact price you negotiated.

How to exchange a car for a loan

Find out how much your trade-in car is worth

The first step in trading a financed car is to find out how much your car is worth and how much you owe on it. Trading a car with negative equity could prove to be a costly decision in the long run.

Determining the approximate market price of your vehicle will help you get an idea of ​​what a dealer would offer for your trade-in and give you some bargaining power. Certain online sites can help you predict the trade-in value of your car based on factors such as the year, make and model of your vehicle, and the number of miles on the odometer.

Compare your vehicle’s approximate resale value to the loan payment amount to determine if you have positive or negative equity. It can differ significantly from your loan balance as it includes your loan balance and any interest and fees you may have incurred.

Compare trade-in values ​​before making a deal

Contact multiple retailers for a trade-in value calculation. If you think a dealer is making you a low offer, you can use the car value numbers found to negotiate. Getting a variety of quotes will help ensure you’re getting the best possible price.

Complete the agreement

Complete the deal after agreeing on a trade-in value and the price of the new car. Read the agreement thoroughly and make sure it includes the current loan amount, loan term, monthly payment, interest rate, and any other verbal promises made during the negotiation process.

It should also indicate how negative equity would be handled. Some dealers will announce that they will pay off your car loan regardless of how much you owe, but end up including the negative equity in your new loan.

Alternatives to car trade-ins?

You don’t necessarily have to trade in your financed car. You can still choose to sell it to a private buyer, but you should notify your lender first. Although a private sale may take longer, you may end up getting a higher amount for your vehicle than a dealer trade-in, which could significantly reduce negative equity, if any.

Try trading your new vehicle for a cheaper one if you can’t buy the car you want, as you’ll have to transfer the negative equity. Although you have to balance the negative equity from the previous car loan, your overall loan balance will be reduced and you end up paying less overall interest.

Continue reading


As you can see, you can easily trade in a financed car. However, we recommend taking the time to understand the essential details in order to make the right decision.

Do you need a loan? Get one in 3 easy steps

If you are considering applying for a personal loan, just follow these 3 simple steps.


Apply for the desired loan amount online. Submit the required documents and provide your best possible application. Stronger applications get better credit offers.


If your application meets the eligibility criteria, the lender will contact you regarding your application. If necessary, provide additional information. You will soon have your loan offer. Some lenders send a promissory note with your loan offer. Sign and return this note if you wish to accept the loan offer.


The loan will then be paid into your US bank account within a reasonable number of days (some lenders only take 2-3 business days). Now you need to set up your repayment method. You can choose an automatic payment method online so you can pay on time every month.


About stilt

Stilt offers loans to international students and US professionals (F-1, OPT, H-1B, O-1, L-1, TN visa holders) at lower interest rates than any other lender. Stilt is committed to helping immigrants build a better financial future.

We take a holistic underwriting approach to determine your interest rates and ensure you get the lowest possible interest rate.

See what others are saying about us on Google, Yelp and Facebook, or visit us at If you have any questions, email us at [email protected]

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