Can you trade in a car that's still under financing for a used car without having to get a new loan?

My car is worth about $7,300 according to KBB. I want to trade it in for a used car because the payments %26amp; insurance are just too much for me these days. Can I trade in the car and walk away with a used car of lesser value without having to get into a new loan?|||Not likely.





Keep in mind that your current loan has to be paid off as well.





So, let's say you are looking at a car that's $5000. You trade yours in (this is ALL hypothetical) and the dealer gives you $7300 for it. Let's also say that you owe $7300 on it, which means the loan on it is paid free and clear. So, now all you have to do is pay the $5000 (plus tax/title, etc.) on the new car and off you go. Do you have the cash for that?





However, let's say you are upside-down on the current loan, meaning you owe more than the car's worth. Let's say you owe more than the KBB value (and please note that KBB values are only a guide, not gospel... dealers DO NOT use KBB to get their trade values... and most people overestimate their vehicles on KBB by rating them as "Excellent" and getting a false sense of their worth), maybe you owe $9000. If the dealer will give you $7300, this still leaves you with $1700 you need to come up with.





The ONLY way you will be able to pull this off is if you have equity in your current loan, the dealer gives you enough to cover your current loan PLUS cash, and it's enough to get you something decent. This scenario is probably not likely, as everything (loan value, trade value, used car values on the next vehicle) work against you.|||Your best bet would be to sell your current car or find someone to take over your payments. Then enter into a separate financing for the used car you want. Understand, car dealerships are in business to make money, if you go about things the way you've stated, you are going to be one skinned person.|||Sounds like you are way upside down on that car loan.





In that case, you're stuck.|||No. The existing loan would be paid off and a new loan obtained for the new vehicle.|||no. new vehicle = new loan.