How to Trade in a Car That is Not Paid Off

Tiny car behind coins


Trading in your used vehicle to a dealership for either a new vehicle or for cash is a great deal for many San Diego drivers. The trade-in process is fairly simple when the car’s completely paid off, however, the process can become much more complicated if you still have an outstanding loan. So, how do you trade in a car that is not paid off? Learn how to trade in a car that you still owe money on with the finance experts at Mossy Toyota below!



Do You Have Negative or Positive Equity?

Before you learn how to trade in a car you still owe on, you first have to learn whether or not 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 find out which equity you have, you’ll need to figure out how much you still owe on your current vehicle, how much the car is worth according to values on Kelley Blue Book® or, and how much you are receiving from trade-in offers. If the offer is less than the amount you owe, then you have negative equity. However, if it’s more than how much you still owe, then you have positive equity.

If you have positive equity, then your trade-in process is still fairly easy. All you have to do is trade in your current La Jolla car, truck, or SUV at a dealership like Mossy Toyota and either keep the remaining funds or put the money towards a new ride! Unfortunately, if you have negative equity, you’ll need to consider the options below to find out which one is best for your financial circumstances.

How to Trade in a Car with Negative Equity

If you have negative equity, there’s no need to worry! Plenty of Chula Vista drivers are curious as to how to trade in a car that’s not paid off. The options you have available include:

  • Make up the difference you still owe after accounting for the trade-in price: This is the first option you should consider since it can easily turn your situation for the better. While not everyone will have enough spare cash to do this, it will work in your favor if you do.
  • Transfer the amount you still owe over to a new loan: Most people choose this option when they have negative equity and want to trade in their current vehicle that’s not paid off. However, transferring the amount to your new loan can increase the monthly payment and in the end, you will still be paying for a car that you traded-in. In other words, this will make you upside-down in your new loan. If you can’t keep up with your current car payments and you are downsizing with a cheaper car, this could be the best option for you.
  • Work with a third party and see how the trade-in offers compare to the ones you have gotten from your local dealerships: Third-party used car companies, such as Carvana and Carmax, tend to appraise cars at higher prices, which might be able to help avoid negative equity.
  • If you still have negative equity, then negotiate with the initial dealership you went to: Provide them with the offer you got from a third-party company and ask them to match it. If they cannot match it, you can try to ask the dealer for the value of the difference you still owe, so you can sell your car outright to the third-party company while having the difference transferred to your new loan.

Find Out More About How to Trade in a Used Vehicle at Mossy Toyota Today!

If you’re still curious about how to trade in a car that you still owe money on, our finance experts are just a click away! Get in touch with us at Mossy Toyota and we can inform you more about the ins and outs of valuing your trade and getting the most out of your vehicle. However, if you want a brand new car for your San Diego drives, you may have to wait until you’ve fully paid off your current model.


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