Yes. Having bad credit doesn't necessarily prevent you from trading in a car that still has an outstanding balance, but it might restrict your options when it comes to choosing a new vehicle. If the amount you owe on the trade-in exceeds its current value, the shortfall will need to be incorporated into the new loan, commonly referred to as Rolling-It-In. Lender guidelines dictate the maximum amount that can be rolled into the new loan based on the buyer's credit score; the lower the score, the less can be rolled over. Consequently, individuals with bad credit often find it advantageous to trade in a vehicle they still owe money on for a new one, particularly if the new vehicle comes with substantial manufacturer rebates to bridge the negative equity gap..