You can trade in your vehicle even with an unsatisfied refinanced loan. In fact, no difference exists between a refinanced loan or the vehicle's original loan when it comes to trading in. The bank has a lien on the vehicle either way, and the loan must be satisfied by the dealership once the vehicle is traded in.
Value and Payoff
Just as with a first-time loan, you can check the vehicle's equity against its loan payoff amount to figure if trading is worthwhile. Call your bank to find out your vehicle's payoff amount. Rather than try to figure out how many payments you have left, calling allows the bank to give you the correct amount with a reduction in interest, as you pay interest daily. Have your dealership appraise your car at websites that offer trade-in appraisal guides, such as the Edmunds or Kelley Blue Book websites.
Dealership Process
In most cases, your dealership will help you to find a new or used car you want to purchase. If your trade is a concern, let your salesperson know. Most salespeople will explain the process, appraise your vehicle and figure out whether or not you have equity -- or if you are upside down, meaning you owe more than the car is worth -- before moving forward. Upon the trade and new car purchase, the dealer will pay off your loan in full.
Considerations
If your refinanced loan is brand-new, it could affect a new loan and its interest rate. All banks are different, however; many like to see an established loan in place. If you just took out a loan, it looks as if you were just extended a line of credit. Your dealership will work with different lenders to get you an approval regardless. Or, you can obtain financing on your own through the bank you used for refinancing or another bank of your choosing. You won't be able to determine whether or not your refinanced loan will affect your lending opportunities until you apply.
Precautions
Before moving forward with another loan, determine why you refinanced in the first place so that you do not put yourself in a similar situation again. For example, if you refinanced because your rate was too high, make sure you are happy with your rate before proceeding. Or, if your payment was too high, ensure you purchase a vehicle within your means this time. Do not make the same mistake twice and proceed with a loan only if you're happy with its term, interest rate and payment.
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