How to Trade in a Car That is Not Paid Off

Trading in a vehicle is a great way to get a fair price for the car while skipping the hassle of selling a car on your own in Indianapolis or Avon. But what happens if you still owe money on the car you want to trade? Do you know how to trade in a car that you still owe on? The finance team at Lafayette Volkswagen has the instructions you need for how to trade in a car that is not paid off. See if there’s a solution that works for you, then browse our pre-owned inventory for your next vehicle.

Are You Positive? The Difference Between Positive and Negative Equity

There are two kinds of equity when you’re paying off a car loan in Noblesville: positive and negative. Having positive equity means your car is worth more than what you own on it. This is a great position to be in, as it makes trading in your car easier and more cost-effective. Negative equity means that your car is worth less than the amount you still owe on the loan. This can make trading in for a different car a bit more complicated.

How to Calculate Your Equity

First, you need to know how much you still owe on your auto loan. This information should be on your most recent loan statement. In a pinch, you can contact the lender and find out how much you owe.

Next, get an estimate of your vehicle’s market value by checking sites like Kelley Blue Book®. Our trade valuation tool will also give you an estimate of your vehicle’s worth.

If your car is worth less than what you owe, you have negative equity. If your car is worth more than your loan, you can move to the next step in the process: trading your car. Your call will be appraised at the dealership to get a more accurate figure of its worth. You can put that money and anything extra towards your down payment.

How to Trade in a Car That’s Not Paid Off and Has Negative Equity

While it’s a bit more complicated to trade in a car with negative equity, that doesn’t mean it’s not possible. Your next step will involve paying off the remaining balance on the old loan. If you can pay the difference on the spot, great! Most shoppers aren’t able to do this, so they transfer the amount they owe on the old loan to a new loan. This will increase your monthly payments on your new vehicle, and you’ll start out upside-down on the loan. That means you owe more than the car’s worth since you’re essentially paying for two cars.

If you’re wondering how to trade in a car that’s not paid off and have it improve your financial situation, you can do so if you’re purchasing a car with much lower monthly payments than your current model. Otherwise, you should probably wait to trade it in.

Learn More About the Trade-in Process with Lafayette Volkswagen

The finance department at Lafayette Volkswagen is here and ready to help you find the best way to trade in your old car! Contact us today with your questions about how to trade in a car you still owe money on. We’ll be frank with you about what’s best for your financial situation while working to get you into a car that’s just right for you and your budget.