Will trading in a car not yet paid for newer cause you to pay more money?

Yes, trading in a car that isn't paid off for a newer car can result in you paying more money. When you trade in a car that is still financed, you owe the remaining balance on your loan. This balance is added to the total cost of the new car you're trading in, and then you have to finance that amount plus the cost of the new car. That means you'll have a larger loan amount and potentially higher monthly payments.

For example, let's say you owe $10,000 on your current car loan and the newer car you are trading your car for is $25,000. The total cost of the newer car with your trade in is now $35,000 ($25,000 + $10,000). If you finance this amount at a 4% interest rate, your monthly payments will be $700 for a 60-month loan.

Compare this to if you were to sell your current car privately. If you were able to sell your current car for $15,000, you would only owe $5,000 on the loan balance ($15,000 - $10,000). This means the total cost of the new car with your trade in is now $25,000 ($20,000 + $5,000). If you finance this amount at a 4% interest rate, your monthly payments will be $500 for a 60-month loan.

As you can see, trading in a car that isn't paid off can cost you hundreds of dollars more over the life of the loan. If you're considering trading in a car that you still owe money on, make sure you weigh the pros and cons of the decision and carefully calculate the potential costs involved.