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

Tiny car with coins and finance paperwork


Are you thinking of trading in your current Monterey Bay vehicle, but it is not paid off completely? Depending on your situation and what you want to get out of this move, this could be a good step to take. But how do you trade in a car that’s not paid off? The steps will differ completely if you have a car with negative equity or positive equity. Learn how to trade in your car that you still owe money for from the finance experts at Lexus Monterey Peninsula!

Find Out If You Have Positive or Negative Equity

If you are considering trading in a vehicle that’s not paid off, the first step you need to take is to determine if you have positive or negative equity. To do so, gather the following information:

  • The amount you owe on the car
  • The amount your car is worth according to Kelley Blue Book® values
  • The trade-in offer amount you get from your Seaside dealership

With this information, you can find out which equity you have:

  • If your car is worth more than what you still owe, then you have positive equity.
  • If you still owe on the loan even with the trade-in value, then you have negative equity. Another way to put it is that your car is worth less than the remaining balance of the loan.

Now that you know if you have positive or negative equity, you can explore your options accordingly:

  • Those car owners with positive equity are in the best position in this case since trading in their vehicle will still be simple. They will be able to pay off their loan balance with the trade-in value and might have extra cash for their next car in Pebble Beach.
  • However, those car owners with negative equity will need to look further into their options to see which one is a good idea for their personal situation.

How To Trade In A Vehicle That’s Not Paid Off With Negative Equity?

While trading in a car that’s not paid off with negative equity will involve more steps, it could potentially still be the best move for you. Take a look at the options below and see if you still want to trade in with negative equity or if you are better off waiting until you have paid off the rest of your loan amount.

Settle The Difference After Trade-in Cost

First things first, you should always explore this option since this is likely the easiest and best way to trade in a vehicle that’s not paid off with negative equity. If you don’t currently have money to do this, you can save up for the payoff amount in the meantime and use this option when you’re ready!

Move The Remaining Balance To New Auto Loan

While this is the most popular option, Lexus Monterey Peninsula would recommend considering this option cautiously. Transferring what you still owe to your new loan might sound straightforward, but the effects on your finance could be more harmful than helpful. When you do this, you will:

  • Likely end up with higher monthly payments in the new loan
  • Be immediately upside-down in your next loan
  • Still be paying for the car that you traded in

However, this is not to say that it can’t be an ideal option for some car owners. For example, for those who are struggling with their current car payments and are planning to get a cheaper car in the Salinas area, this option could work out for them.

Work With A Third Party & Compare Trade-In Offers

You have most likely asked for trade-in offers from the local dealership you have been working with, but did you know that you can also sell your car to a third-party used car company? Companies, like Carvana and Carmax, tend to evaluate used cars at higher rates, so you might have positive equity when you work with them!

Still have negative equity with a higher offer? You should talk to the initial dealership you worked with and ask them to match the offer from the third-party company. If they don’t match the offer, you can ask them for the difference that you still owe, so you can sell your current vehicle outright to the third-party company and have the remaining balance moved to your new loan!

Learn More About Trading In Cars with Lexus Monterey Peninsula

Now that Lexus Monterey Peninsula has gone through what seems like the impossible, we want to advise you to always read the contract carefully before signing the new car loan agreement. While you might just want to complete this somewhat lengthy process as quickly as possible, always be sure to know what interest rate and loan terms you will need to work with. Feel free to reach out to our finance team if you have any more questions!


More from Lexus Monterey Peninsula

  • National Teen Driver Safety Week

    Did you know that this week is National Teen Driver Safety Week?   October 17-23, 2021.   We are using this week as a reminder to talk to our teenage children about the importance of staying safe behind the wheel. While these are important conversations to have every week, this week we are being sure…

  • Selling My Car to a Seaside Dealership

      Do you have a current vehicle you no longer want? Many Monterey Bay drivers sell their vehicle to a local Monterey Bay dealership when they’re ready to have their old cars taken off their hands. Working with a dealership is easier than trying to sell the car yourself, which is why dealerships are one of the…

  • How To Get a Car Loan

      A car loan is a great option for Monterey Bay drivers in the market for a new vehicle. A car loan gives drivers the ability to obtain a vehicle without having to spend tens of thousands of dollars at one time. A lot of car shoppers don’t have five figures saved for a new car….

Posted in Uncategorized