Explanation of a Loan Balance
If you own a vehicle that you purchased with financing but are looking to trade it in for a new one, it’s important to know what your loan balance is before you ever walk onto the dealership lot.
A loan balance is an amount left to pay on your loan. Every loan you take out will have a loan balance up until the loan is entirely paid off. Your loan balance changes on a daily basis because interest is added daily.
Outstanding Loan Balance
Hopefully, you’ll never see this item listed on your statement. An outstanding loan balance usually refers to a past due amount. If you are late on your loan payments, you are probably looking at a notice referring to your outstanding loan balance. It could be referring to just the loan payment which is past due or the loan balance in its entirety.
Best Loan Calculators
If you cannot find your loan statement, you will need to know a few details about your loan to calculate your loan balance. Use a traditional loan calculator and input the remaining time left on your loan, your monthly payment, and your interest rate. Then you will have to make a guestimate on your loan balance. Once all the numbers match up, you have found your loan balance. Of course, you can also call your lender or visit their website to get an accurate statement of your loan balance.
Best Loan Balance Calculator
Or get straight to the number you are looking for with a loan balance calculator.
Trading in a Car with a Loan Balance
Typically, it is not a problem to trade in a car even if you have a remaining loan balance. If the value being offered on your vehicle is higher than the amount you owe, you will come out ahead. You can then pay off your loan and use the remaining balance towards your new car purchase.
Some different options are available for you if you owe more than the dealership is willing to pay for your trade-in. You have the opportunity to pay off the remaining balance on your own, or, you might be able to roll your remaining balance into your newly purchased car loan. Rolling over your balance will most likely put you upside down on your new car loan. You will need to work hard to pay down the balance quickly.
Of course, it is best to avoid all of this by purchasing only a vehicle you can afford to pay off before you trade it in for a newer one. The grass may always be greener on the other side, but adding hundreds or thousands of dollars onto the price of your new ride isn’t any fun.