How To Trade In A Car That Isn’t Paid Off

Can You Trade In a Vehicle That's Not Paid Off?

We all love our cars, but sometimes, it’s time for a switch. And sometimes, that switch comes a little earlier than originally expected. Can you trade in a vehicle that’s not paid off? If you still owe money on your car but are looking to change vehicles, you’re in luck! Dealerships encounter this situation very often and have devised several different options. Read on for a brief guide on how to trade in a car that is not paid off.


Trading in your car with an outstanding loan balance can be a little nerve-racking. Can you trade in a financed car that’s not paid off? Generally, the answer is yes. The difference between your car’s current worth and the amount of money still owed on it is called equity. There are a lot of options for dealing with equity, but the best practice is always to spend some time educating yourself and exploring various options and offers.

Positive Equity

When your car is worth more than what you currently owe on it, you have “positive” equity. For example, if you have $15,000 left on your car loan, and you receive an offer for $20,000, you have $5,000 of positive equity. This amount can be applied towards your new car, immediately knocking $5,000 off your new loan.

Negative Equity

The opposite scenario is called “negative” equity. In this situation, your car is worth less than what the current loan balance is. For example, if you have a car with $20,000 left on its loan, and you receive an offer for $15,000, you are stuck with $5,000 of negative equity that needs to be paid off. In these situations, it is usually best to pay a bit more off of your current car. If that’s not an option, there’s a few other things you can do.

The best option is to pay the negative equity in cash. While inconvenient, this ensures your loan balance is closed and it won’t continue to be a burden. However, not many people have several thousand dollars in available cash.

The easiest option is to simply roll over the negative equity into your new car loan. This is certainly enticing, but it will result in a larger loan balance and paying a higher monthly payment, in addition to paying interest on the negative equity amount. You can also explore different loan terms and interest rates to find what fits your budget.

Learn More At Mike Anderson Merrillville

Buying a new car is a very exciting time, but it can also be a little stressful and confusing. If terms like “equity” and “finance” make your head spin, we can help! Here at Mike Anderson Chevy, we are happy to work with customers in any situation, including positive and negative equity. We can also talk you through the process of how to trade in a car. Just need some advice? We will gladly answer any and all questions you may have relating to your specific circumstance, completely free of charge! Visit us, your local Chevrolet dealership, today.

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