How to Trade in a Car That is Not Paid Off

Trading in a car is a great way for Minnetonka-area drivers like you to cover the downpayment for your next vehicle. If you have fully paid off your original car loan, the trade-in process will be quick and easy. But, how do you trade in a car you still owe on? The process is a little different, but the finance team at Motorwerks MINI can help you explore your options so you can get the best trade-in value possible. Learn more about how to trade in a car that is not paid off, then stop by our dealership in Golden Valley to get your trade-in started today! 

Do You Have Positive or Negative Equity? 

Before we look at how to trade in a car that is not paid off, it is important that you review your current loan information to determine whether you have positive or negative equity in the vehicle. Here’s what that means: 

• Positive equity: The car is worth more than what you still owe
• Negative equity: The car is worth less than what you still owe 

To calculate whether you have positive or negative equity, you’ll need to take a look at how much you still owe on the vehicle, the car’s Blue Book® value, and what kind of trade-in offers you receive. 

How to Trade In a Car You Still Owe On If You Have Negative Equity

Having positive equity on your vehicle puts you in the most ideal position when it comes to trading in your car. You will be able to complete the trade without owing any amount and have some ready cash available that you can use towards the downpayment for your next vehicle. However, if you have negative equity you should consider the following:

• Make up the difference you still owe after accounting for the trade-in price. This is the simplest option, however not everyone will be in the financial condition to do this.
• Transfer the amount you still owe over to a new loan. Most St Louis Park-area drivers choose this option when they have negative equity and want to trade in their current vehicle that’s not paid off. You should note however that transferring the amount to your new loan will likely increase the monthly payment, and you will still be paying for a car that you traded in. This situation is commonly referred to as being upside-down in your new loan. If you can’t keep up with your current car payments and you are downsizing with a less expensive vehicle, this could be the best option for you.

No matter which option you go with, Motorwerks MINI recommends that you carefully review the contract before signing on to a new car loan. 

Learn More About the Trade-in Process with Motorwerks MINI 

If you have further questions about how to trade in a car that you still owe on, feel free to contact us online or give us a call at (952) 213-5589. Our friendly and knowledgeable sales associates are standing by to guide you through the process. In the meantime, make sure to explore our current new vehicle specials and pre-owned vehicle offers to take advantage of some of the best deals in the Minneapolis area. We’re ready to work with you, so come see us today!