How To Trade In a Car That Is Not Paid Off

Trading in a car is not usually the first option of most peaople who have resolved to buy and own a car, which is why before anyone wants to buy a car, a number of factors are put into proper consideration. From the reason why they need a car of their own – Means of transportation, luxury living, as a service, or a gift etc. Beyond the purpose of purchase come the amount or price of each car option and then the type of car with features unique enough to address the individual’s purpose of purchase.

Yet, among all the jitters and joy that may come with buying a new car – are a few uninvited limitations – such as insufficient amount for full purchase. Hence, the need for purchase on loans or other financial credit means. This could bring worries to such individuals wondering how they could trade in a car that is not paid off. Good news is there’s a way to still trade it in and get the most possible money for it.


Can you trade in a car that is not paid off?

You certainly can, and now that you are aware you can. It is worthy of note – to understand that – the amount or price you get for the car alternatively is always not guaranteed. Also, not many car buyers get the desired money or the right amount their car is worthwhen they trade in a car that is not paid off. These differs with positive and negative equity of persons though.

What is required To Trade In a Car That Is Not Paid Off

1. Positive and Negative Equity

Positive Equity: If your car is worth more than the car loan you owe, you have positive equity. This means if you trade in your car, the dealer may apply any equity you have toward the purchase of the new car. Simply put your car must be currently worth more than what you still owe to be seen as positive equity.

Negative Equity: If you owe more on the loan than your car is worth, then you have negative equity — but that will mean you need to decide which is your best option if you fall in this category.

These are two important factors to bear in mind when trading in a car that is not paid off its loan.


2. Pay the Difference You Owe

The first option that you have when trading in a car with negative equity is to pay the difference that you still owe on the car. Definitely, that doesn’t sound easy because if you sure had the leftover debt just lying around you probably wouldn’t be in the negative equity category. Hence, it’s possible to push over the left over debt onto the new loan which is probably the most preferred one for many.

Rolling over that remaining balance onto the new loan, that means that you would be rolling over the extra that you still owe on the current car onto the new. For illustration, if your previous loan was left with a balance of $2500, and your current car trade in is worth $15,000. You will now owe a grand total of $17,500. This option may raise your monthly payment by a considerable amount and the negative angle to this is that you are still paying for a car that you already traded in. This really isn’t the best choice, but might be if you don’t have the extra cash to afford the higher monthly payment.


3. Get your trade In appraised by a third party.

Third-party companies like Carmax, Carvana, or Vroom are good options for your car appraisal, this is because third-party used car dealers like these will typically appraise your car at a higher rate than the average dealership. That is to say, if the traditional dealership is willing to give you $15,000, then a Carmax or Carvana may actually offer you more perhaps $16,000 or $17,000 approximately which translates, you will get more for your trade overall. But doesn’t clear off your negative equity.

How to make up the negative equity despite the higher offer?

Ask the dealer for a check – you should be able to show the offer from Carmax or Carvana to the dealer that you’re working with, and if they are unable to match the offer, then you can ask them for a check for the difference that you still owe says Ari Janessian – an auto broker and Youtuber.


This is because the dealer has the money to handle this level of transaction and it works because you will still be paying the difference back on the loan anyway.

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