{"id":14913,"date":"2024-08-07T09:00:59","date_gmt":"2024-08-07T14:00:59","guid":{"rendered":"https:\/\/www.netcredit.com\/blog\/?p=14913"},"modified":"2026-02-24T13:47:16","modified_gmt":"2026-02-24T19:47:16","slug":"can-i-trade-my-car-in-with-bad-credit","status":"publish","type":"post","link":"https:\/\/www.netcredit.com\/blog\/can-i-trade-my-car-in-with-bad-credit\/","title":{"rendered":"Can I Trade My Car in With Bad Credit?"},"content":{"rendered":"

If you have poor credit, purchasing a car can be difficult. But trading in your current vehicle for a newer model can increase your chances of securing financing, subject to other circumstances like outstanding liens on the car.<\/p>\n

In this blog post, we\u2019ll explore the ins and outs of trading in a car with bad credit.<\/p>\n

Can I Trade In My Car With Bad Credit?<\/strong><\/h2>\n

You can usually trade in a car with bad credit<\/a>. However, it requires some careful research. Know your credit score and your car\u2019s trade-in value before you go to the dealership. Explore alternative solutions such as refinancing or leasing<\/a>. And consider whether your next car would further strain your credit standing.<\/p>\n

When Does It Make Sense to Trade In My Car?<\/strong><\/h2>\n

The equity you have in your vehicle is a very important factor in deciding if a car trade-in is a good idea.<\/p>\n

If your current car is paid off, or if it\u2019s worth more than what you owe on it, you have positive equity in your vehicle. If you owe more on your current loan than your car\u2019s value, you have negative equity in your vehicle.<\/p>\n

Rolling negative equity into a new car can be very risky. Essentially, you end up paying for two cars simultaneously \u2014 your old one and the new one. Since bad credit auto financing can have steep loan rates, you\u2019ll be paying a high amount of interest.<\/p>\n

If the car you currently drive is unreliable or the new car you\u2019re considering offers money-saving benefits \u2014 like better gas mileage or lower car insurance rates \u2014 that can balance out the payment increase. In those cases, rolling over negative equity into a new car might be a reasonable choice. Having some cash on hand to offset the negative equity can also be helpful in this situation.<\/p>\n

Can I Trade In My Car if I Still Owe Money on My Car Loan?<\/strong><\/h2>\n

Yes, you can usually trade in your car even if you still owe money on your existing car loan. However, consider a few factors first.<\/p>\n

Negative equity.<\/strong> If you have negative equity, the remaining balance on your old loan will be rolled over into your new loan, potentially increasing your monthly payments. You usually don\u2019t want to be \u201cunderwater\u201d or \u201cupside down\u201d on your loan \u2014 owing more money on the car than what the vehicle is worth.<\/p>\n

In this case, lenders might only consider financing if borrowers make a down payment that covers the difference. You may be more likely to receive loan approval if you can put cash down (typically 20% for those with bad credit), because you\u2019ll pose a smaller credit risk. Plus, it might help you negotiate a better interest rate for your loan.<\/p>\n

Car price.<\/strong> When trading in a car with an outstanding loan balance, opt for a car that fits within your budget and won\u2019t exacerbate your credit situation. Consider a reliable used vehicle<\/a> that meets your needs.<\/p>\n

Buying a new car with bad credit may not be a wise decision. Aside from the high price tag, most new vehicles depreciate in value as soon as you drive them off the lot. Opting for a used car is typically a more cost-effective choice.<\/p>\n

Trade-in value.<\/strong> Before visiting dealerships, research the value of your car. Trusted websites like Edmunds<\/a> and Kelley Blue Book<\/a> can give you an accurate valuation based on your vehicle\u2019s make, model, mileage and year. Knowing the value of your vehicle can give you an edge during negotiations and prevent you from accepting an unfairly low trade-in offer.<\/p>\n

Where Can I Trade In My Car?<\/strong><\/h2>\n

Dealerships.<\/strong> Most car dealerships accept trade-ins and may even offer promotions to attract customers with bad credit. However, be prepared for the possibility of receiving a lower trade-in value than if you were selling privately. Before you start looking at cars and discussing trade-in values, shop around for bad credit loans. Then ask the car dealer if they can match or offer a better deal.<\/p>\n

Online car buying services.<\/strong> Various online platforms specialize in buying used cars directly from owners. These services can provide a quick and straightforward way to trade in your car without the need for in-person negotiations.<\/p>\n

Private sale.<\/strong> While it might take more time and effort, selling your car privately could fetch you a better price. You can use the money from the sale to pay off your existing loan, which can improve your credit standing.<\/p>\n

What Can I Do With My Car if I Can\u2019t Trade It In?<\/strong><\/h2>\n

If trading in your car isn\u2019t an option, there are alternatives to consider.<\/p>\n

Refinance your loan.<\/strong> Contact your current lender to explore refinancing options. Refinancing could help lower your interest rates and reduce monthly payments, making it easier to manage your auto loan with bad credit.<\/p>\n

Improve your credit score.<\/strong> Take proactive steps to improve your credit score<\/a> by paying bills on time, reducing credit card balances and disputing any inaccuracies on your credit report. A higher credit score will enhance your chances of securing a better car loan in the future.<\/p>\n

Lease a vehicle.<\/strong> While leasing a car with bad credit might not be the most cost-effective option in the long run, it offers more accessibility. Lease terms often require lower credit scores compared to traditional car loans.<\/p>\n

\n

DISCLAIMER: This content is for informational purposes only, and should not be relied on as advice of any kind. NetCredit and its affiliates do not provide financial, legal, investment or tax advice.<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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