Does Having a Car Loan Affect its Trade In Value?
An unpaid car loan on a trade in vehicle doesn’t precisely affect the trade in value. It might be the dealer will lower the trade in value of the car based on the reduction that the loan causes, but the real value of the car is unchanged. Essentially when a car is traded in and still has an unpaid balance, the dealer has to pay off that car. They will deduct the pay off amount, and sometimes charge notary or other fees, from the trade in value of the vehicle. If you can, paying off the car before trading it is the better approach.
