How to Trade in a Car That Is Not Paid Off

We gladly purchase trade-ins from owners in Porterville and surrounding areas. It’s one way we get our used vehicle inventory because car shoppers want to upgrade their rides to a new vehicle on our lot. You can also trade in your vehicle in Visalia for a certified pre-owned model. Even if you still owe on your car loan, you can trade in your vehicle. It’s just a little more complicated than a straight trade-in with a car title that is free and clear without a loan on it. 

Learn how to trade in a car that is not paid off with our guide from Porterville Ford near Tulare. You need to take the correct steps to accomplish this properly. Read on for more information on how to trade in a car you still owe money on!

Do You Have Positive or Negative Equity? 

To see how to trade in a car that’s not paid off, your first step is to figure out if you have positive or negative equity. Positive equity is when your car is worth more than what you still owe on the loan. Negative equity happens when your car is worth less than what you still owe on the loan.

Understanding how to trade in a car that is not paid off becomes simpler when you have positive equity versus negative equity. First, find out how much you still owe on the auto loan. Second, get the trade-in value for your vehicle through Kelley Blue Book and the amount you’re getting from trade-in offers. Offers that come in for less than the amount you owe mean you have negative equity. However, positive equity occurs when you have offers that are worth more than the amount remaining on your auto loan.

When going through how to trade in a car that is not paid off, having positive equity is much easier because you can use the proceeds of the trade-in to pay off the remaining balance.

If you have negative equity, you may have to work a bit harder when learning how to trade in a car you still owe money on.

Trading in a Car with Negative Equity

When going through how to trade in a car you still owe money on with negative equity, you have to make up the difference between auto loan amounts. It takes a little more effort, but it is doable.

Save up money to pay off the difference. This is the first option you should consider since it can easily turn your situation for the better when you pay off an auto loan completely. You could get better financing rates for your next auto loan. You’ll need to have the spare cash on hand or save up for it over a few months.

Transfer the amount you still owe over to a new loan. Many people choose this option when they have negative equity and want to trade in a car they still owe money on. But you have to be able to make the payment on your new auto loan. Transferring the amount to your new loan can increase the monthly payment. Also, you’ll be paying off the loan for a vehicle you no longer drive. You already start with negative equity on the new auto loan because the value of the loan has the full value of your newer vehicle and whatever’s left of your older loan. If you can’t keep up with your current car payments and you are downsizing with a cheaper car, this is a great option for your situation. 

Always read the fine print of the auto loan terms before deciding on this option. Plug some numbers into our payment calculator to get an estimate of your new monthly budget as you decide how to proceed forward.

Learn More About Trading In a Vehicle at Porterville Ford 

Still need more details on how to trade in a car that is not paid off? Contact us or call 559-615-5358 to speak with a member of our finance team. We’d love to help you find a new or new-to-you vehicle for you and your family.