How to Trade in a Car That is Not Paid Off

If you would like to know how to trade in a car you still owe on, you’ve come to the right place! Making that trade is generally a pretty standard practice for many dealerships, and among those in the Lima and Toledo areas we have plenty of experience helping many drivers get into vehicles they prefer. Let’s get into the details below. If you have any questions at all, feel free to get in touch with us.

Do You Have Positive or Negative Equity?

To start, determine which of these situations you are in:

• Positive equity: your car is worth more than what you still owe
• Negative equity: your car is worth less than what you still owe

If the vehicle is worth more than you owe on it, it can be used to help pay for your next vehicle, but if you have negative equity, where you owe more money on the vehicle than it is worth, then you would have to work something out with the dealer, like paying an additional cost. There are options if you have negative equity.

Trading in a Car with Negative Equity

Consider these options:

• Make up the difference you still owe after accounting for the trade-in price. This is the first option you should consider since it can easily turn your situation for the better. While not everyone will have enough spare cash to do this, it will work in your favor if you do.
• Another option is to transfer the amount you still owe over to a new loan. Most people choose this option when they have negative equity and want to trade in their current vehicle that’s not paid off. However, transferring the amount to your new loan can increase the monthly payment and in the end, you will still be paying for a car that you traded in. In other words, this will make you upside-down on your new loan. If you can’t keep up with your current car payments and you are downsizing with a cheaper car, this could be the best option for you.
• If those two options aren’t for you, then you should work with a third party and see how the trade-in offers compare to the ones you have gotten from your local dealerships. Third-party used car companies, such as Carvana and Carmax, tend to appraise cars at higher prices, which might be able to help you not have negative equity anymore!
• If you still have negative equity with a higher appraisal value, then negotiate with the initial dealership you went to. Provide them the offer you got from a third-party company and ask them to match it. If they cannot match it, you can try to ask the dealer for a value of the difference you still owe, so you can sell your car outright to the third-party company while having the difference transferred to your new loan.

Learn More About the Trade-in Process with Exceptional Motorcar

Our payment calculator and car buying tips are great resources for Toledo and Findlay-area drivers looking to get into a new vehicle!