How To Trade In A Car That’s Not Paid Off?

While it might seem weird at first to trade in a car that you still owe money on, it is definitely possible and could be a good idea for some financial situations. The steps on how to trade in a car that’s not paid off near Oak Park will essentially depend on if you have positive or negative equity. With positive equity, the process will be similar to trading in a vehicle with no remaining loan balance. However, trading in a car with negative equity will probably be more complex. Learn more on how to trade in a car that’s not paid off below.

Do You Have Positive or Negative Equity?

To get started, you will need to determine if you have positive or negative equity. What does this mean? If you find out that the trade-in offer amount covers all or more than the amount of your loan amount left, then you have positive equity. On the other hand, if your Lincoln Park vehicle is worth less than what you still owe on the loan, then you have negative equity. You can use the estimated value of how much your car is worth based on Kelley Blue Book® values from our online tool.

Depending on if you have positive or negative equity, the overall approach on how to trade in a car that’s not paid off will be like:

• Positive Equity — Simple process that is relatively similar to trading in a car that doesn’t have a payoff amount
• Negative Equity — More complicated process with several options to choose from

What Are My Options When Trading A Car With Negative Equity?

If there is still an amount you owe even after accounting for the trade-in value, there are several options that you can choose from as your next step. Despite which option you decide to choose, be sure to take the time to read the contract carefully, so you can understand what’s included in the car loan, such as the interest rate and the loan term.

Pay Off The Remaining Amount In Your Auto Loan

This is the ideal option in situations where the car owner has negative equity because there will be no financial strains. However, not a lot of people can consider this option if they don’t have extra money to spare.

Add The Remaining Balance To A New Loan

Even though many people end up picking this option, it could be a risky path if you don’t use it wisely. When you move the amount onto the new loan, you will instantly be upside down in that loan and your monthly payments will probably go up. If you are struggling to make current payments, you can get a cheaper car and use this option to help you manage your finances better in Elmwood Park.

Seek Out A Third Party Used Car Company

Third party used car companies tend to estimate vehicles at a higher price tag, so chances are you might get a better offer from them than your local Chicago dealership. If you do get an offer that is high enough to put you in a position with positive equity, you can directly sell your car to a third party instead.

However, if you still have negative equity, then request the initial dealership that you had an offer with to match the price. What if they don’t match the price? Then, have the dealer write you a check of the difference between the third party’s offer and the amount you still owe, so you can sell your car to the third party. Then, the remaining amount you owe should be moved to your new auto loan.

Trade In Your Car at Victory Toyota of Midtown Today!

Now that you know how to trade in your car with a standing loan, talk with our finance team and let us help you navigate this process! We can also answer your question and offer you advice according to your financial situation.