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

Excited Couple Reviewing Trade in Offer with Salesman


Looking to trade in your vehicle for a new Honda model at Ken Ganley Honda? Prefer to take the sale and convert it to cash? Not sure how to trade in a car you still owe on? The trade-in process is fairly simple, however, a car that’s still not paid off can complicate things. Learn how to trade in a car that is not paid off with the finance experts at Ken Ganley Honda below!

Positive and Negative Equity

Before you learn how to trade in a car you still owe on, you need to find out whether you have positive or negative equity: 

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

Not sure which category you fall under? Calculating your vehicle’s equity isn’t overwhelmingly difficult. To find out whether your car’s equity is positive or negative, you just have to know how much you still owe on your current model, how much the car is worth according to Kelley Blue Book® values, and how much you are receiving in trade-in offers. If the offer is more than how much you still owe, then it is positive! However, if it is less than the amount you owe, then it’s negative equity. 

If you have positive equity, you’ll be able to trade in your Westlake vehicle without any outstanding debt and possibly put the extra money towards a down payment on your next car. If you have negative equity, you’ll have to take into consideration the following options to solve your financial predicament.

How to Trade in a Car with Negative Equity

Do you have negative equity? Are you trying to figure out how to trade in a car that is not paid off? There’s a variety of ways you can pay off your remaining debt: 

  • 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 the 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.
  • Make Up the Difference You Still Owe After Accounting for the Trade-In Price: This option 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.
  • 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 you not have negative equity anymore.
  • 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 Car You Still Owe On at Ken Ganley Honda

If you have any lingering questions about the vehicle trade-in process at Ken Ganley Honda, you should contact us today! We’re more than happy to clear up any confusion you may have about how to trade in a car that is not paid off. However, if you’re looking to purchase a new car, truck, or SUV in North Olmsted, your best bet is to wait until you have paid off your car in full.

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