Money Down or Trade-In Equity?

Both lower the amount you borrow. The difference is what you give up: cash you could keep for emergencies, or a car you could otherwise keep driving.

The short answer

Mathematically, a dollar of trade equity and a dollar of cash both reduce the loan by a dollar. Trade-ins may also reduce sales tax in many states. The better choice usually depends on keeping enough cash in reserve and whether you actually want to part with the current car.

How each one works

Trade-in equity

Value minus payoff. Positive equity is applied to the purchase; you give up the car.

Cash down

Money from savings. It lowers the loan, the payment and total interest, but reduces your emergency cushion.

A hypothetical example

Common mistakes

Draining savings to lower a payment that was already affordable.
Accepting a low trade offer because the deal "looks" good on the payment.
Forgetting that keeping the current car as a second vehicle has its own costs.

How to decide

Keep an emergency reserve first.
Compare the loan rate with what your cash earns — a high rate favors putting more down.
Get a trade offer and a private-sale estimate before deciding.

See how your equity changes the math

Carvest applies your trade equity, taxes and fees to the new loan and compares the result with keeping.

Compare My Cars

Carvest provides estimates and decision-support information. Actual vehicle values, financing, insurance, repair costs and ownership expenses can vary.