How to Trade in a Car That is Not Paid Off

If you’re like most Johnston and Des Moines drivers, you’ve probably heard of the benefits of trading in your car at a dealership. Generally, the process is straightforward but does require some extra steps if you still owe on your car. In the guide below, we cover how to trade in a car that is not paid off, so you have the information you need to take the next step. Our finance team shares the details about how to trade in a car you still owe on. 

Do You Have Positive or Negative Equity? 

The first step is to determine whether you have positive or negative equity. Here’s a brief overview of the two types of 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 determine whether you have positive or negative equity, you’ll need to figure out how much you still owe on your vehicle. You’ll also want to consider your trade offer/s to the actual value of the car, based on current market values. If the trade-in offer you get is more than what you owe on the car, you have positive equity. If the offer is less than the value, you have negative equity. 

Having positive equity sets you up for success. You can easily pay off the remaining car loan balance with the money you get from the sale, and may still have money left over to put toward the purchase of a new Acura or pre-owned vehicle. If you have negative equity, you’ll have a couple of options to weigh.

Trading in a Car with Negative Equity

If you’re a Waterloo driver with negative equity, you have a couple of options available to you: 

• Pay the difference after taking the trade-in price into account. This is the option that most drivers consider first, as it can easily turn the situation around. The problem is that not everyone has the spare cash. If you do, though, this is your best bet. 
• Roll the amount you owe on your current car into a new loan. If you want to buy a new car, you may be able to take the balance on your current car and roll it into your new loan. Keep in mind that your monthly payment will be higher, and you’ll still be paying for your current vehicle. 

Regardless of the choice you make, we highly recommend reading your auto loan contract before committing to it. 

Learn More About the Trade-in Process with Acura of Johnston 

Do you still have questions about how to trade in a car that is not paid off? The experts at Acura of Johnston are here to help! We’ll guide you through the process of trading in your car, even if it’s not fully paid off. Contact us online or call us at 877-331-1557 to learn more about the trade-in process, or check out our car-buying tips hub for more information.