How Do you Trade in a Car with a balance of about $7,500 left to pay off?

Ok, lets say you take it to a dealer and he offers to buy it for $8000 and you're buying a car for $5000. That means he will take over your payments (of $7500) and then apply the $500 to the new car, making your new total $4500. Now uming you cannot afford to shell out $4500, you'll need a loan. So lets say you tell the dealer you cannot put any money down, you need 100% financing for the $4500. He'll then go to whatever banks he uses to see if he can get you a loan for $4500, but that doesn't mean he will be able to, its totally up to the bank. So you can see that being able to put some money down is helpful: A) because it decreases your monthly payment and B) because it makes you look better to a bank when deciding to loan you the money or not. But some banks may offer the 100% financing. However, you said you thought the car may only be worth what you have left on it, in that case, a dealer may not even be willing to trade-in the car or it may be that he simply agrees to take over your current loan to get you to purchase his vehicle. Its worth it to try. Now, purchasing a car is not bad to your credit, in fact its great! It shows the creditors that you can handle a loan and make payments in a timely fashion, BUT if you default on the loan or screw it up in some way it will KILL your credit, so keep that in mind. Good Luck!