How to Trade in a Car That’s Not Paid Off

Hands Doing Calculations with Calculator


There are many ways you can trade in a car, whether you’re trading your vehicle into Union-area dealerships to purchase a new vehicle or you’re trading in your vehicle for cash. While you’ll find the trade-in process is pretty straightforward when your vehicle is paid in full, you may be wondering how to trade in a car that’s not paid off. Although there are more steps to follow, the team in our finance department at VIP Honda are here to help with how to trade in a car. If you have questions about your Honda Certified Used finance rates, contact our team today!

Determining Whether You Have Positive or Negative Equity

One of the first steps for how to trade in a car that’s not paid off is to understand which of these two situations you fall under: 

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

Which equity you have is found by taking a look at how much you still owe on your current vehicle, how much the trade-in value of your vehicle is, and how much you can receive from trade-in offers around South Plainfield. If your trade-in offer is less than your remaining balance, that means you have negative equity. Positive equity is when the offer you receive is more than what you owe. 

Learning how to trade in a car with positive equity is the more ideal position as you don’t have to worry about owing any amount. Similar to the typical trade-in process, you can easily apply the leftover amount towards the purchase of the Honda on which you’ve had your eye.

When you find you have negative equity, you’ll need to consider the options below to find the right options for your financial situation. 

How to Trade in a Car With Negative Equity

So, how do you trade in a car that’s not paid off? There are several options you can choose for to accommodate your financial situation: 

  • Pay off difference owed after accounting for the trade-in price. While this is the more simple option, not everyone has enough spare cash to cover the remaining amount that they owe. However, you should take the time to consider your budget as this can easily turn your situation around for the better.
  • Transfer the amount you still owe over to a new loan. Some Kenilworth-area dealerships are willing to work with your remaining balance by rolling it over into a new loan. This means that you’ll likely have a higher monthly payment as you’re paying off the new car and the car you’ve traded in. While this makes you upside-down in your new loan, it can be a great option for drivers who are struggling to keep up with their current payments and want to downsize to a cheaper vehicle.
  • Try to work with a third party and see how the trade-in offers compare to the ones you have gotten from your local dealerships. Those previous options may not be the best for your financial situation. So, try to see if there are better trade-in offers at third-party used car companies, such as Carvana and Carmax, as they tend to appraise cars at higher prices. The difference in offers may mean that you’re not in negative equity anymore, or you’re in a better position to consider the other options above.
  • If you still have negative equity with a higher appraisal value, then negotiate with the initial dealership you went to. If the third-party company’s offer doesn’t put you in a better position, try bringing that offer to a dealership to see if they can match it. If they cannot match it, try to ask the dealer for a value of the difference you still owe. You can sell your car outright to the third-party company, then have the difference transferred to your new loan at a dealership. 

Whichever option you end up choosing, be sure to thoroughly read your contract before signing a new car loan, and reach out to our team if you have questions about the Honda Certified Used finance rates.

Explore Car Buying Tips With VIP Honda!

Now that you have a better understanding of how to trade in a car, find the answers to your other pressing questions like, “Should I fix my car before trading it in?” Our team is here for you every step of the car-buying process. Whether you’re applying for financing or interested in more car-buying tips, turn to our team at VIP Honda.

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