How to Trade in a Car That Is Not Paid Off

Trading your current vehicle at a dealership allows you to easily upgrade your Buffalo commutes with a new model or sell your current vehicle for cash. The trade-in process is relatively simple when the car has been completely paid off, but you need to take a few additional steps when the car has not been paid off. So, how do you trade in a car you still owe on? Follow along with Basil Ford to learn how to trade in a car that is not paid off and contact our finance team if you have any questions.

Establishing Positive or Negative Equity

The state of your remaining loan and the value of your vehicle help determine how to trade in a car you still owe on. You can either be in positive equity or negative equity: 

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

To determine your equity, you'll need to know the remaining amount of your car loan, how much your vehicle is worth according to Kelley Blue Book® values, and how much you'll get from trade-in offers. When the amount you're offered is less than the amount you owe, it is negative equity. On the other hand, if you will get more than what you owe, it is positive equity.

If you have positive equity, you'll be in a better position to trade in your vehicle to pay off the remaining amount that you still owe. You may even have enough leftover to use towards your next car in West Seneca! 

If you have negative equity, there are a few additional steps when learning how to trade in a car that is not paid off. Your options can vary depending on your financial situation. 

How to Trade in a Car with Negative Equity

When you want to upgrade your trips around Rochester or Cheektowaga, you're not out of luck if you have negative equity. Consider these options when wondering how to trade in a car you still owe on: 

• Cover the remaining amount you owe after applying the trade-in price. This may be the simpler option if you have the ability to do so. If you have room in your budget to cover the remaining amount out of pocket, this can easily clear your balance for an upgrade.
• You may be able to transfer the amount you owe to your new loan. This is a common option for drivers with negative equity. This option means you're paying for the new car and the car you trade in and will increase the overall amount you're paying each month. If you aren't able to keep up with your current monthly payments and want to downsize to a cheaper car, this may be a more manageable option. 

Whatever option helps you trade in your car that's not paid off, it's a good idea to contract fully before signing a new car loan. 

Discuss Your Finance Options at Basil Ford!

Now that you know how to trade in a car that is not paid off, discuss your financing needs with our knowledgeable finance center. Whether you're eyeing a pre-owned SUV or truck or you want more wiggle room in your budget, the team at Basil Ford is here for your trade-in needs.