Yes, an individual is able to trade in a car with a loan on it. Car dealerships understand this process, and will explain the procedures to you at the time. In order to calculate the amount you need to pay for your new car after trading in your old car, use the following calculation. Start with the price of the new car including sales tax–for example, $10,000—and subtract the trade in value of your old car—$5,000—then add the amount required to pay off the loan on the car—$2,000. This will leave you with the amount you need to pay for the new car after the trade-in has been complete—$7,000.