How to Trade in a Car That Is Not Paid Off

Trading in a car at an auto dealership like Covert Cadillac is a common practice. It allows drivers in Leander to lower their down payment on a newer vehicle while giving an auto dealership a way to replenish its stock of quality used vehicles. The trade-in process for Georgetown drivers is pretty straightforward when the car, truck, or SUV is completely paid off. If you’re wondering how to trade in a car that is not paid off, it is possible but requires a few more steps. Keep reading this guide from our finance team if you want to know how to trade in a car that is not paid off!

Do You Have Positive or Negative Equity? 

Before learning how to trade in a car you still owe on, you have to find out whether you have positive or negative equity. Learn the difference here:

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

You can easily calculate which kind of equity you have with your current vehicle. First, find out how much you owe with your auto loan. Then, determine your car’s current trade-in value. At this point, you can see what kind of offers you could get for your trade-in from dealerships. If the offer from dealerships is less than the amount you owe, that indicates negative equity. However, if it is more than what you owe on a loan, you have positive equity.

Positive equity for your auto loan gives you the most advantageous position when you learn how to trade in a car you still owe on. The proceeds from the trade-in can go towards your newer vehicle! If, however, you have negative equity, you’ll need to consider several options to decide which suits your situation.

Trading in a Car with Negative Equity

If you’re a Cedar Park driver with negative equity, it takes a little more effort to determine how to trade in a car you still owe on. See your options here:

• Make up the difference in the amounts with cash. This is the first option you should consider because it’s the simplest answer to negative equity. While not everyone will have enough spare cash to do this, you can save up the money
• Transfer the amount 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, not all lenders will do this. Plus, this strategy can increase your monthly payment and the amount of debt you owe as you’ll still be paying on a car you don’t own anymore. Be careful with this because you want to be able to maintain your good credit.

The best piece of advice we can give when learning how to trade in a car that is not paid off is to always read the contract carefully before signing an auto loan. That way, there are no surprises and you know exactly what you need to do.

Trade-In Your Ride for a Newer Vehicle at Covert Cadillac 

If you want to trade in your current vehicle for something newer or you still have questions about how to trade in a car you still owe on, contact us online or call (512) 774-6512. Our Austin finance team is happy to help in any way we can! Find out more about buying or selling a vehicle with our car-buying tips.