How to Trade in a Car You Still Owe On

Finance Agreement

Are you looking to upgrade your ride but your current vehicle is not paid off? If so, you might be wondering how to trade in a car you still owe on. Although the entire process is easy when the car is already paid off, there are a few more steps when there is still a balance on the loan. Learn more about how to trade in a car you still owe on with Sam Leman Automotive Group today! For more information, feel free to contact us anytime!

Positive vs.Negative Equity

When learning how to trade in a car you still owe on, you’ll need to figure out if 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 figure out which type of equity you have, you need to know how much you currently have on your loan and how much the vehicle is worth based on Kelley Blue Book® values. If the trade-in offer is less than what you owe, you have negative equity, however, if it’s more than what you owe, you have positive equity.

Having positive equity is ideal, as the entire process will be much easier than if it was negative. You won’t owe anything on your loan if it’s positive, and you can trade in your current Bloomington, Morton, Peoria vehicle without adding more to your new loan.

If you have positive equity, then you’re in the most ideal position in this situation, as the trade-in process will still be fairly easy. You will be able to trade in your current ride without owing any amount and even have some you can use towards your next car!

If you do have negative equity, it’s best to really consider your options for purchasing a new vehicle.

Trade-Ins With Negative Equity

When learning how to trade in a car that’s not paid off with negative equity, you should consider a few different options around :

  • Make up the difference you still owe after accounting for the trade-in price. This is the best option, as it can turn the entire situation around. Although it’s true that not everyone is able to do this, it’s the best option here.
  • Another option is to transfer the amount you still owe over to a new loan. This is the most common option for those with negative equity. It’s important to note that transferring the amount to your new loan will increase your monthly payment. This will result in being upside-down in your new loan, however, if you’re getting a less expensive car, this could be your best option.
  • If those two options aren’t for you, work with a third party to get different trade-in offers Third-party companies like Carmax and Carvana usually appraise vehicles at higher prices. This might pull you out of negative equity altogether!
  • If you end up with negative equity, even after a higher appraisal value, then it’s best to go back and negotiate with the original Bloomington, Morton, Peoria dealership. Show them the offer from the third party and see if they can match it. If not, you might be able to ask for the value of the difference owed. This allows you to sell to a third party and have the difference carried over to your new loan.

Regardless of which option you choose, we recommend carefully reading the contract to prevent any confusion or surprises in the future.

Trade-In Your Vehicle With Sam Leman Automotive Group Today!

Now that you know more about how to trade in a car you still owe on, come stop by Sam Leman Automotive Group for an appraisal! While you’re here, check out our new vehicle inventory, and visit our finance center to discuss buying options around Bloomington, Morton, Peoria! Be sure to use our new vehicle specials to save even more on your new ride today!


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