Trade-In Value Impact Tool Calculator
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This tool is part of these step-by-step guides. Follow along for personalized help.
Frequently Asked Questions
How does a trade-in affect my loan?
A trade-in reduces your loan amount by the equity value (trade-in value minus what you owe). Positive equity lowers your loan and monthly payments. Negative equity (owing more than trade-in value) gets rolled into your new loan, increasing it.
Should I trade in my car or sell it privately?
Private sales typically yield 10-20% more than trade-in value. However, trade-ins are convenient, reduce taxable amount in some states, and simplify the transaction. If you have time and want maximum value, sell privately. If convenience is priority, trade-in.
Does trade-in reduce sales tax?
In some states (like California, Florida, Texas), trade-in value reduces the taxable amount, saving on sales tax. In other states, you pay tax on the full purchase price. This can save $800-$1,500 on a $35,000 vehicle with a $12,000 trade-in.
What if I owe more than my trade-in is worth?
If you owe more than your trade-in value (negative equity), the difference gets rolled into your new loan. This increases your loan amount and monthly payment. Consider paying down the negative equity before trading in, or choose a less expensive new vehicle.
