- You will likely owe negative equity: When you trade in a car, the dealer will give you a trade-in value for your car. This value will be based on the car's age, mileage, condition, and market value. If the trade-in value is less than the amount you still owe on the car, you will have negative equity. This means that you will need to come up with the difference in cash or by rolling it into your new car loan.
- Your interest rate may be higher: If you have negative equity, the dealer may charge you a higher interest rate on your new car loan. This is because the dealer is taking on more risk by lending you money when you already have debt.
- You may not be able to get the car you want: If you have negative equity, you may not be able to get the car you want because the dealer may not be willing to give you enough trade-in value. You may need to choose a less expensive car or make a larger down payment.
Ultimately, trading in a new car that you have not made any payments on is a personal decision. There are both pros and cons to consider, and you should weigh all of your options before making a decision.
