How to Trade In a Car That Is Not Paid Off

Are you ready for something new to put in your St. Louis driveway? Or maybe you just want a car that has better safety features for navigating St. Peters commutes or weekly errands? Trading in your current ride for an upgraded used vehicle is a great option.

A trade-in can give you money for a down payment toward your new-to-you vehicle. Luckily, the trade-in process is straightforward when your title is unencumbered by a loan. But what if you’re still paying on a loan for your current vehicle? Can you still trade in a vehicle that is not paid off? We’ll demonstrate how to trade in a car you still owe on thanks to our O'Fallon dealership. Read on to learn more.

Determine If You Have Positive or Negative Equity

To see how to trade in a car that is not paid off, start by seeing if you have positive or negative equity. Either of these situations will help you figure out how to trade in a car you still owe on:

  • Positive equity occurs when your vehicle is worth more than what you still owe.
  • Negative equity happens when your vehicle is worth less than what you owe on the loan.

Find out the outstanding balance of your vehicle loan. Then, discover how much the car is worth according to values for your trade-in. The trade-in value gives you a starting point for how much money you could get from a dealership when trading in your vehicle.

But don’t stop with a trade-in value from Travers Automotive Group. Look over how much you could get from trade-in offers at other Florissant area dealerships. If the trade-in offer is less than what you owe on your auto loan, then that translates to negative equity. On the other hand, if the offer is more than what you owe on your current loan, then positive equity is your situation, which gives you more bargaining room with a dealership.

Trading in a Vehicle With Positive Equity

Positive equity gives you a better bargaining position with a dealership. The trade-in process is still easy because you’ve got some cash to play with as opposed to getting into more debt with another auto loan. Beyond paying off the loan with your trade-in, you have some cash to put toward your next vehicle as a down payment! Negative equity reduces your options ahead of trading in a vehicle. But you can still trade in a vehicle for which you still owe money on a loan.

Trading in a Car with Negative Equity

If you have negative equity, determine the amount of the loan you still owe.

Make up the Difference to Alleviate Negative Equity

Save up some cash to pay the difference to get positive equity. If the difference between the value of the trade and paying off the loan is $250, save up that amount of money to give yourself positive equity. For example, the amount you have to pay off is $3,000. Your trade-in value is $2,750. The difference you have to make up is $250 to even it out.

Transfer the Amount You Owe to a New Loan

For a new loan on the vehicle you’re about to purchase, you can transfer the amount of the old debt to your new loan. This will depend if you qualify for this type of program. However, this strategy can increase your monthly payments and/or the interest and debt you owe. Taking on more debt could negatively affect your credit. You’ll also be paying for a car that you traded in and don’t own anymore. Lastly, the new loan means the value of the debt is more than what the newer vehicle is worth since you’re still paying for the older vehicle.

Our team recommends reading the auto loan contract carefully before signing it. There may be stipulations you’re not familiar with. You’ll also have to gauge how much you’ll be paying on your new loan versus the old one. Can you still afford it? It might be wiser to pay off your current auto loan first.

Learn More About the Trade-In Process With Travers Automotive Group

Still have questions about how to trade in a car that is not paid off? Contact us or call . Our finance center is happy to help in any way we can! While you’re here, apply for financing and look over our car-buying tips for more information.


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