How to Trade in a Car That is Not Paid Off

Finance Agreement
Many Fitchburg drivers aren’t sure how to trade in a car that is not paid off. You’ll find that while the trade-in process is pretty straightforward when your car is completely paid off, the process of trading in a car you still owe on has a few more steps. Here, Ron Bouchard Chrysler Dodge RAM explains the steps of how to trade in a car that’s not paid off, and if you have any questions, feel free to contact our finance team.


Do You Have Positive or Negative Equity on Your Car?

The first thing you need to do when learning how to trade in a car that is not paid off is to determine which of these two situations apply to you:

  • Positive equity: You have positive equity if your vehicle is worth more than what you owe on it.
  • Negative equity: You have negative equity if your vehicle is worth less than what you still owe.

To determine if you have positive or negative equity, you’ll need to learn how much you still owe on your current car and how much the car is worth. You can use Kelley Blue Book® values or use the Ron Bouchard Chrysler Dodge RAM value-your-trade tool. If the value estimate is less than the amount you owe, then you have negative equity. However, if it is more than what you still owe, then good news: you have positive equity!

If you have positive equity, you’re in the most ideal position for trading your car to a Leominster dealership. However, if you have negative equity, you’ll need to decide how to move forward using one of the options below.

Trading in a Car with Negative Equity

How do you trade in a car that you still owe on if you have negative equity? There are several options:

  • Make up the difference in your loan balance after accounting for the trade-in value. This is the best option because it can quickly turn your situation around. But, you have to have the cash to do it, and many Fitchburg drivers don’t.
  • Transfer the amount you still owe to your new car loan. Transferring the amount to your new loan will increase your monthly payment, and you will still be paying for the car you traded in. In other words, you will still be upside-down on your new loan. If you’re struggling to keep up with your current car payments and want to downsize to a cheaper car, this could be the best option.
  • Work with a third party and see how their trade-in offers compare with the ones you have received from local Gardner dealerships. Third-party used car companies like Carvana and Carmax tend to appraise cars higher, which can help you get out of your negative equity situation.
  • If you still have negative equity with a higher appraisal value, you can always try to negotiate with the initial dealership that made you a trade-in offer. Show them the offer you got from a third-party company and ask if they will match it. If they won’t, you can ask the dealer for a value of the difference you owe so that you can sell your car outright to the third-party company and have the difference transferred to your new auto loan.
  • Wait until you pay off your current car: Ask yourself if you really need a new vehicle now or if you can wait a bit longer until you pay off your existing vehicle.

No matter which option you choose, Ron Bouchard Chrysler Dodge RAM recommends you always read the contract carefully before signing it!

Learn More About Trading-in a Car with Ron Bouchard Chrysler Dodge RAM

If you have more questions about how to trade in a car that you still owe on, contact us at Ron Bouchard Chrysler Dodge RAM today. From a brand new Dodge to a pre-owned Chrysler, we have what you’re looking for. Check out our new car specials and reach out to us today!


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