How to Trade in a Car You Still Owe On

East Hills drivers and shoppers have likely gone through the process of trading in a car for a new one. Generally, the process is straightforward, but that is when the car’s completely paid off. If you haven’t finished paying off your car, you’ll have to go through more steps in order to complete the trade in process. Do you know how to trade in a car that is not paid off? Learn about the process with the finance team at Major World below. 

Positive or Negative Equity: Which Do You Have? 

You can trade in a car that’s not paid off, but you need to determine the financial state you are in: 

• Positive Equity: The vehicle is worth more than what the borrower owes
• Negative Equity: The vehicle is worth less than what the borrower owes 

Calculating your equity is pretty simple, consider how much you still owe on your current vehicle, and the value according to Kelley Blue Book®, and the potential trade-in offers. If the offer is less than the amount you owe, then it is negative equity. If you are being offered more than what you owe then it is positive. 

Having positive equity puts you in an ideal position and makes the trade-in process relatively simple. You can trade in your current vehicle at a dealership near Bayside without owing anything and can use some of the payment towards your next car! If you are in a position of negative equity you’ll have to consider a few different paths to determine the one that works best for you.

How to Trade in a Car That is Not Paid Off with Negative Equity

There are several options to consider with Forest Hills-area dealerships when you have negative equity:

• Make up the difference you still owe after accounting for the trade-in price. Not everyone will have enough spare cash to do this, it will work in your favor if you do.
• Transfer the amount you still owe over to a new loan. More often than not, if you have negative equity and want to trade in their current vehicle that’s not paid off this is the option drivers choose. 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. 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. Companies such as Carvana and Carmax, usually appraise cars at higher prices, which might be able to help you not have negative equity anymore!
• If you still have negative equity and a higher appraisal value, then negotiate with the initial dealership you went to. Inform them of the offer you got from a third-party company and ask them to match it. If they can’t, 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. 

Our finance team recommends that you read the fine print of any contract you’re going to sign in. 

Trade-in Your Vehicle with Major World in Long Island City!

Do you still have questions regarding how to trade in a car you still owe on? Contact experts at Major World today and we’ll help you resolve your vehicle troubles as best we can! If you are looking for a used vehicle in the Long Island City area, you may be in a better position if you wait until your current vehicle is paid off.