How to Trade in a Car That’s Not Paid Off

Excited Couple Reviewing Trade in Offer with Salesman

If you’re in the market for a new car near Wichita, you’re most likely aware that trading in vehicles at a dealership can lower the cost of your next. Although trading in a car is pretty simple if your current car is already paid off, the process will involve a few extra steps if your loan isn’t yet paid off. Learn everything you need to know about how to trade in a car that is not paid off, and whether you have positive or negative equity, in this guide from the auto finance professionals at Don Hattan Dealerships. 

Do You Have Positive or Negative Equity? 

Depending on the status of your current car loan, learning how to trade in a car you still owe on can be fairly straightforward—or a bit more complicated. The key factor here is whether you have positive or negative equity:

  • 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 you’re not sure whether your loan equity is positive or negative, start by finding out how much your financed car is currently worth. You can look up your vehicle on Kelley Blue Book or use online tools to Value Your Trade in just a few minutes. Compare this amount to the amount that you still owe on your loan:

  • If you owe less than your car’s estimated trade-in value, then you have positive equity.
  • If you owe more than your car’s estimated trade-in value, then you have negative equity.

With positive equity, the trade-in process is simple—and you are well-positioned to make money on your trade-in and apply it toward the purchase of a new vehicle. With negative equity, the trade-in process is more complicated—but it’s possible! Our auto finance experts can tell you more about options like bundling your old loan and your new loan together.

How to Trade in a Car with Negative Equity

A vehicle is an everyday necessity—and sometimes it’s just not possible to wait until the old loan is paid off in order to purchase the one you really need. If that’s the case for you, you’ll want to look into how to trade in a car you still owe on, even if you’re underwater on the loan repayment. You have several options here:

  • Pay the difference between the loan balance and the trade-in value if you have the cash available.
  • Combine the outstanding amount on your old loan with a new loan. Known as a loan rollover, this option allows you to move forward with a trade-in—but won’t resolve negative equity (unless your new vehicle costs less).
  • See if third-party used car companies can offer more than Andover-area dealerships. Getting more for your trade-in could give you a better chance at resolving your negative equity.
  • See if your dealership can match a third-party offer. If they can’t, ask for a value of the difference you still owe on your loan. This way, you can sell your car outright to the third-party company and transfer the difference to your new loan. 

Explore Your Trade-In Options with Don Hattan Dealerships 

To speak with an auto finance professional about how to trade in a car you still owe on, all you need to do is contact our finance center or pay us a visit in Wichita—we’re happy to help! In the meantime, explore our pre-owned inventory for a lower-cost option, or get pre-qualified for financing online!

 

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