![car loan calc with trade in car loan calc with trade in](https://parkers-images.bauersecure.com/wp-images/182811/espresso-machines-for-cars.jpg)
The difference between your equity and the remainder of the loan can then be applied directly to your next vehicle purchase, lowering the amount of money you will need to borrow and helping you get a better interest rate. You have positive equity which means the car is worth more than what you still owe on the loan.Once you are ready to trade in that vehicle, you’ll be faced with one of two scenarios: If you take care of your car, stay on top of your monthly auto loan payments and the demand for used cars is high, then your equity should still enter positive territory relatively quickly. Unfortunately, cars age and decrease in value each month, even as your equity increases with each subsequent loan payment. As you make monthly payments you build your equity (the dollar amount you actually own).
![car loan calc with trade in car loan calc with trade in](http://vehicle-photos-published.vauto.com/0e/72/88/75-c57d-474b-8093-a0fe92ebafc3/image-7.jpg)
When you first bought your car, you likely took out a loan that you have been paying off every month since.
![car loan calc with trade in car loan calc with trade in](https://i.pinimg.com/736x/51/e8/d7/51e8d7a812e73a84e662acde90801cdb--car-loans-infographics.jpg)
How Does Vehicle Equity Work for a Trade-In? For this reason, it’s important to determine your vehicle’s trade-in value and your equity. If you decide to trade in your current car before you pay it off, be prepared to do a little bit of work upfront so you are ready to move forward when you get to the dealership.ĭepending on the amount left on your loan and the value of your car, you might owe money or get money back that can be applied to the new car. Though it’s a little more complicated than selling or trading in a car you own outright, it is possible to trade in a vehicle that still has a loan.