Trading in your current vehicle works similarly to a down payment — the trade-in value is subtracted from the price of the new car before your loan amount is calculated, which lowers both your monthly payment and total interest. The tricky part is that the value a dealer offers for your trade-in isn’t always the vehicle’s true market value, so it’s worth checking independent valuation sources before you negotiate. Once you have a realistic trade-in estimate, enter it into our car payment calculator to see the exact impact on your new monthly payment.
Keep in mind that a trade-in and a cash down payment aren’t always treated identically in every deal, particularly around tax calculations, so it’s worth understanding both options before deciding which to use — our guide on down payment vs. monthly payment covers this in more detail. If lowering your payment further is the goal, combining a trade-in with other strategies from how to lower your monthly car payment can bring your final number down even more.