How to Trade in a Car That is Not Paid Off?

Signing Finance Documents for Car


If you’re interested in upgrading your Cincinnati ride with a trade-in, you might be wondering how to trade-in a car that is not paid off. While the trade-in process is much easier when all payments are complete, this can still be done even if you’ve got a few more left. Learn more about how to trade-in a car you still owe on and then speak with our finance team at Joe Morgan Honda if you have any questions, then explore our new inventory

Do You Have Positive or Negative Equity? 

Before you try and trade-in a car you still owe on, you’ll have to see which category you fall into below: 

  • 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 which equity you have, you’ll have to see how much you still owe on the vehicle. This can be done by seeing how much the car is worth according to Kelley Blue Book® values. When the estimated trade-in offer is less than the amount you owe, then it is negative equity, but if it is more than what you still owe, then your equity is positive. 

When you have positive equity, this makes the trade-in process much easier as you can trade-in your car without owing any amount. You can even use some of the trade-in compensation to put toward your next Middletown ride. If you have negative equity, you will have to assess your options to see which suits you best. 

How to Trade-In a Car You Still Owe On 

Even if you have negative equity, you can still trade-in a car that you still owe on. See how it can be done in several ways below: 

  • Make up the difference you still owe after accounting for the trade-in price. This is the first option you should consider since it can easily turn your situation for the better. While not everyone will have enough spare cash to do this, it will work in your favor if you do.
  • Another option is to transfer the amount you still owe over to a new loan. Most people choose this option when they have negative equity and want to trade in their current vehicle that’s not paid off. However, transferring the amount to your new loan can increase the monthly payment and in the end, you will still be paying for a car that you traded in. In other words, this will make you upside-down in your new loan. If you can’t keep up with your current car payments and you are downsizing with a cheaper car, this could be the best option for you.
  • If those two options aren’t for you, then you should work with a third party and see how the trade-in offers compare to the ones you have gotten from your local dealerships. Third-party used car companies, such as Carvana and Carmax, tend to appraise cars at higher prices, which might be able to help you not have negative equity anymore!
  • If you still have negative equity with a higher appraisal value, then negotiate with the initial dealership you went to. Provide them the offer you got from a third-party company and ask them to match it. If they cannot match it, you can try to ask the dealer for a value of the difference you still owe, so you can sell your car outright to the third-party company while having the difference transferred to your new loan. 

Learn More About the Trade-in Process at Joe Morgan Honda 

Now that you know more about how to trade-in a car that is not paid off, take the next step to find your next Lebanon ride. Find more helpful car-buying tips and tricks from Joe Morgan Honda and save on your next purchase when you shop our inventory of new vehicle specials. Speak with our sales team if you have any questions or apply for financing online at home to get started. Contact us today for more details on how to trade-in a car you still owe on and stop by our dealership here in Monroe!

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