When you trade in a car with an unpaid loan, the dealership will typically pay off the loan on your behalf and add the amount of the loan to the cost of the new vehicle. This means that you will be financing a larger amount, which will result in higher monthly payments.
In some cases, the dealership may not be able to pay off the loan in full. If this happens, you will need to continue making payments on the loan while also making payments on the new vehicle. This can be a difficult financial burden, so it is important to make sure that you can afford the payments before trading in a car with an unpaid loan.
Here are some tips for trading in a car with an unpaid loan:
* Get pre-approved for a loan before you visit the dealership. This will give you a better idea of how much you can afford to spend on a new vehicle.
* Be prepared to make a down payment. A down payment will reduce the amount of the loan that you need to take out, which can save you money on interest.
* Consider extending the term of your loan. If you extend the term of your loan, your monthly payments will be lower, but you will end up paying more interest in total.
* Weigh the pros and cons carefully. Trading in a car with an unpaid loan can be a good way to get a new vehicle, but it is important to make sure that you can afford the payments before you make a decision.
