A trade-in will usually help decrease your monthly payment – but not always! If the trade has positive equity (it’s worth more than the balance of the loan against it, or there is no loan against it), it can be put toward the purchase of a new vehicle and reduce the amount that needs to be borrowed, which in turn reduces the monthly payment. If the trade has negative equity (it’s worth less than the balance of the loan against it), the negative equity in the trade will need to be paid-off by the dealer. Frequently, that negative equity is “rolled”, or added, to the new loan, increasing the amount that needs to be borrowed and increasing the new monthly payment.