How to Trade in a Car That is Not Paid Off

Many Dover drivers have asked the finance team at Kent County Motors how to trade in a car that is not paid off. While the trade-in process for a car that’s paid off is pretty straightforward, it’s a little more complex if you still owe money on it. So how do you trade in a car you still owe on? Find out here from the helpful finance team at Kent County Motors, and contact us if you have any questions.

Do You Have Negative or Positive Equity?

The first step in knowing how you can trade in a car that’s not paid off is to determine if you have negative or positive equity on your car? Here are the definitions:

• Negative equity: your vehicle is worth less than what you owe
• Positive equity: your vehicle is worth more than what you owe

To calculate which one applies to you, find how much you still owe on your current car and how much the car is worth according to Kelley Blue Book® or the Kent County Motors value your trade tool. Then get some trade-in offers from Milford dealerships. If the offers are less than the remaining balance of your loan, then you have negative equity. But if the offers are more than your remaining balance, then it is positive.

Having positive equity is the best position, as the trade-in process is easier. You’ll be able to trade in your current car in Smyrna without owing anything and even have some money you can put towards the down payment for your new car! However, if you have negative equity, you’ll need to analyze your options to see which one works best for your unique financial situation.

Trading in a Car with Negative Equity

These are your options on how to trade in a car you still owe on if you have negative equity in Middletown:

• Make up the difference in cash on the amount you owe. If you have the cash, this will easily turn your situation around.
• Add the amount you still owe to a new auto loan. Most people choose this option when trading in a car that’s not paid off. However, adding the amount to your new loan may increase your monthly payment and you’ll be upside-down on your new loan. But, if you’re struggling with your current car payments and need a cheaper car, it may be your best option for you.
• If you don’t like the first two options, work with a third party to see if their trade-in offers might beat the ones you’ve gotten from dealerships. Third-party used car companies, like Carvana and Carmax, sometimes appraise vehicles at higher prices.
• If you still have negative equity even after getting an offer from a third-party company, try to negotiate a higher price with the initial dealership. Show them the highest offer you’ve received and ask them if they can match it. If they can’t or won’t match it, ask the dealer for a value of the difference between what you still owe and what they will give you. Then, sell your car to the third-party company and have the difference transferred to your new loan.

Remember to always read the contract carefully before signing any new paperwork.

Trade-in Your Car to Kent County Motors Today

If you still have questions about how to trade in a car that is not paid off, contact our finance specialists! It might be best to wait until you have paid your car off, but if you can’t wait, we’re here to help. Reach out to us today! Take a look at our attainable used inventory.