For a variety of reasons, I’m seriously considering ditching my gas-guzzling SUV and getting a Toyota Prius hybrid. Problem is, I’m only 1.5 years into a 5-year loan on that SUV. So how does it work when you have a vehicle you haven’t paid off and want to get a new one? Does the car dealership buy your old one for some set amount and roll the difference into the loan on your new vehicle?
In some instances yes. But a better idea is probably to sell your SUV first. Depending on the interest rates on each loan you will probably come out better.
Oh man, are you in a bad spot. That’s about the worst time you can sell your car, within 2 years after you buy it.
What they do is figure as folows- you have a trade in.They will buy that trade in for (say) $8000*. You still owe $15K. Thus, you have to come up with $7000. They will often tag that onto what your new car is costing you, thus you’ll have a “negative trade in”. Usually, you won’t get any special financing, either.
What’s worse, you’ll likely be dealing with a Toyota dealer. Fine cars, but their US dealers are the worst crooks in the business. Thus, they’ll hose you on the purchase price (If sticker is $20000**, they’ll ask for $23000, saying there is a “premium” on that model). Then, they’ll give you a loan several points over what you’d get anywhere else, adding another $5000 onto your final price, and lastly, they will rip you off on the “trade in”, so a car worth $10000, but which most dealers would give you $8000, they’ll offer $7000. So, just by having to go through a Toyota dealer, it’ll cost you an extra $11000! :eek: In other words, you would have to make payments on $30000!
Worse still is how bad your "trade in’ will be. Let’s say you had a $25000 SUV, so you have paid it down to maybe $20000. I am not kidding about it being worth maybe $10000. MAX would be $15000, to a private party. In other words, expect to lose at least $5000, more if you buy from a Toyota dealer.
If you MUST get a Hybrid, try a Honda. Or one of other several super high milage super low emmision regular gasoline cars. But I’d wait until the loan on your SUV is paid off. 
*which means it’s worth around $10000.
** and a “sticker price” of $20000, really means a negotiated price of $18000 or so. So a “premium” of “only” $3000 is more like $5000. If they are asking for a “premium”, you don’t want that car that bad. Trust me.
Watch out for Honda dealers. They’re famous for being unscrupulous, too, and probably moreso than Toyota. Again, excellent vehicles and I’ve owned two. I’ll just never get one from a dealer again. 
If you want to stay in an SUV, consider a Mercury Mariner or a Ford Escape, both of which are available as Hybrids (well, the Mercury will be a short wait).
But more importantly: If the whole point of trading your SUV for a hybrid is for the economy of using less gasoline, then strongly consider all of the above advice compared to what you’ll expect to pay for gasoline if you keep the SUV. It really sounds like that if economy is the chief motivating factor, you may as well just pay for the gasoline in the vehicle you already have.
If you’re doing this for purely economic reasons (i.e. to save money on gas), and not for aesthetic reasons (you want to help the environment), then you need to figure out whether or not you are really saving money. Chance are you’re not.
What’s the mileage on your SUV, and how many miles a year do you drive it? IF you drive 20,000 miles a year, and you get 10 mpg, then you’re using 2,000 gallons of gas, and it’s probably costing you $4000-$5000 a year in gas. If a smaller car gets 30 mpg, then you’ll use 667 gallons of gas, costing $1300 - $2000. So your annual savings might be $2700-$3000.
Most SUVs get better than 10 mpg, though. Mine gets about 19, and I only drive about 10K miles a year, making the difference between it and a Prius worth maybe $500-$1000/year in gas, if that.
Unfortunately, trading in a 1.5 year old SUV for a new Prius will probably cost you a lot more than that, especially if you trade in the SUV at a dealer, because you’ll only get the wholesale used price for it (if that). Unless you drive a lot of miles a year, making the swap on purely financial grounds probably doesn’t make sense. You might be better off driving the SUV for another two or three years, then selling it and buying a smaller vehicle.
Also, may I recommend http://www.edmunds.com for pricing? This will help you figure out how much you should expect to pay for a Prius and how much you can trade your SUV in for (if you decide to do it). It is very handy to have this information with you when you go to the dealer. You will be suprised how far off they are (to their advantage) on pricing.