How to Trade in a Car That Is Not Paid Off

Excited Couple Reviewing Trade in Offer with Salesman

Are you thinking about trading in a car, but you haven’t paid off the loan yet? It’s certainly possible to trade in a car you owe money on, but the process may look different than if your car were fully paid for. As always, Peters Chevrolet Buick Chrysler Jeep Dodge Ram Fiat is here to help you make the smartest decision for your budget and your driving needs in Tyler.



In the guide below, our expert staff explains how to trade in a car that is not paid off, including a look at how positive and negative equity can affect your position.

Positive Equity vs. Negative Equity

Before getting too deep into how to trade in a car you still owe on, you must establish whether you have positive or negative equity.

  • Positive equity is when your car’s value is greater than your loan balance
  • Negative equity is when your car’s value is lower than your loan balance

Unsure what your car is worth right now? You can use our value your trade tool to estimate its current value with just a few clicks! If the trade-in estimate you receive is less than the amount you still owe on your loan, it means you have negative equity. If the estimate is greater than the amount you owe, then you have positive equity.

Positive equity puts you in the most optimal position to trade in a car before it’s paid off. For example, if your car is worth $5,000 and you only owe $3,000, you will have $2,000 in equity after trading it in. You can pocket that money or use it towards the down payment on your next vehicle.

With negative equity, it’s a little trickier because there’s an outstanding balance that must be paid off in some fashion. Explore the options for trading in a car with negative equity, below.

How to Trade in a Car with Negative Equity

So, you owe more on your loan than what your car is currently worth. Here are some options for how to trade in a car you still owe on:

  • If you can, delay the trade-in until you’ve paid off the car. This is the best decision for your future finances, but if you’re researching how to trade in a car that isn’t paid off, you likely need a new vehicle sooner than later. If the trade-in can’t wait, read on to explore other options.
  • Pay the difference upfront. If you’re able to gather the necessary funds, you can pay off the difference when you trade in your car and buy or lease your next vehicle with a clean slate.
  • Roll over the loan. If you don’t have enough money to pay the difference up front, you will usually have the option to roll over the difference into a new loan. You’re still paying off the difference from your old car at the same time as you’re starting to pay off your new car. In this case, you’ll want to consider a cheaper car, so you can decrease your chances of becoming upside-down on the new loan right away.

Learn More About Trade-in Options at Peters Chevrolet Buick Chrysler Jeep Dodge Ram Fiat

Our team is here to help Longview and Marshall drivers get behind the wheel of a quality vehicle without sinking their finances. If you are looking at trading in a car with negative equity, we have a budget-friendly inventory of used vehicles and an ongoing selection of pre-owned specials. With any additional questions about trading in a car before it’s paid off, please contact us and we’ll be happy to help.


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