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How to Trade in a Car That is Not Paid Off?

Tiny car with coins and finance paperwork
 

You’ve likely heard of trading in a car at a dealership, and either pocketing the money from the trade-in or putting it toward the purchase of another car. The trade-in process is fairly straightforward when the car has been fully paid off. When it hasn’t been paid off, there may be more steps involved. How do you trade in a car that has been paid off? The finance team at Sawyer Chevrolet, Inc. has put together the following guide to help you navigate the process of trading in a car that you still owe on. 

 

 

Do You Have Positive or Negative Equity? 

Before you move forward with trading in a car that hasn’t been paid off, you’ll first want to determine 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. 

To determine which equity you have, find out how much you still owe on your current vehicle, how much the car is worth, and how much you’ve been offered to trade it in. If the offer is less than the amount you owe, then it’s negative equity. If it’s more than what you owe, then it’s positive equity. 

Having positive equity is the better position to be in, as the trade-in process will be pretty simple. You’ll still be able to trade in your current car and pay off your current loan without worrying about owing anything going forward. You may also have money left over to put toward the purchase of a new or used car. 

On the other hand, if you have negative equity, you’ll want to weigh your options and decide which solution makes the most sense for your finances. 

How to Trade in a Car You Still Owe On

Hudson drivers who have negative equity on their cars yet wish to trade them in can take one of the following courses of action: 

  • Make up the difference you still owe after taking the trade-in price into account. This is the simplest option. Not everyone has the spare cash to do this, but if you do, it’ll make your situation easier. 
  • Another solution is to create a new car loan and transfer the amount you still owe to this new loan. Transferring the amount you still to your new loan can raise the monthly payment — and you’ll essentially still be paying for a car that you traded in. If you’re struggling to make your current monthly payments, and you want a more affordable car, this might be a good option for you. 

Learn More About the Trade-in Process with Sawyer Chevrolet, Inc. 

Do you still have questions about how to trade in a car that is not paid off? The financiers at Sawyer Chevrolet, Inc. are on call to assist you. If you’re looking to trade in your current car, then get behind the wheel of a new one, contact us online or call us at 518-303-2798. In the meantime, check out our car buying tips hub for more information on topics related to car buying. 

 

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Catskill, NY 12414
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Sawyer Chevrolet, Inc. 42.216, -73.8842.