What happens if you trade in your car for a cheaper one
If you trade, the dealer will pay off your old loan and apply the difference to the price of the new car. The difference might be positive, meaning you have money left over that will be applied as The outstanding balance on your existing car (the trade-in) will be rolled into the loan on thenew car (the one you are purchasing), assuming you have decent credit. The negative to the type of trade you are proposing, is that you will typically take a beating, unless the car you are trading is in short supply, Another good option is to sell your car and pay off the debt. If the car is now worth less than you owe, consider taking a personal loan to cover the difference when you pay back the lender. Financing the difference with a credit card is a bad idea, though, unless the card offers an exceedingly low interest rate.