{"id":5021,"date":"2021-03-02T01:00:00","date_gmt":"2021-03-01T19:00:00","guid":{"rendered":"https:\/\/carsplan.com\/?p=5021"},"modified":"2023-12-02T20:59:19","modified_gmt":"2023-12-02T14:59:19","slug":"how-to-trade-in-a-car-that-is-not-paid-off","status":"publish","type":"post","link":"https:\/\/carsplan.com\/how-to-trade-in-a-car-that-is-not-paid-off\/","title":{"rendered":"How To Trade In A Car That Is Not Paid Off?"},"content":{"rendered":"\n
Want to trade in a car for a new one? If so, you can easily do so if the car is paid off. However, if it is not paid off, it is not that straightforward. In that case, you have to find the answer to the question, How to trade in a car that is not paid off?<\/p>\n\n\n\n
In our post below, we will answer this question in great detail. We will analyze this problem from various angles to understand how to trade in a car that is not paid off.<\/p>\n\n\n\n
You can trade in a car that is not paid off. To do so, you have to find out regarding the equity which you have in your car.<\/p>\n\n\n\n
When you’re gauging the same, there can be two outcomes. We will highlight both of these below.<\/p>\n\n\n\n
This is when the loan amount that is outstanding on your car is lesser than the value of the car. The difference between the car’s value and the loan amount is positive and is known as positive equity. This is your ownership of the car.<\/p>\n\n\n\n
In case your car is worth less than the loan amount, the difference between the car value and the loan is negative. In that case, your equity in the car will be negative.<\/p>\n\n\n\n
However, the good news is that you can certainly trade it in despite the type of equity you have in your car.<\/p>\n\n\n\n
We will highlight how to trade in a car with positive equity and negative equity below.<\/p>\n\n\n\n
The primary thing that you need to do in this case is to contact your lender. The lender will let you know the payoff amount. The payoff amount is generally a bit higher as compared to the outstanding amount. That is why you have to contact your lender first.<\/p>\n\n\n\n
After that, you have to check the trade in value of your car. You can contact the dealership for the same. The difference between the value of the car and the outstanding amount will be positive in this case. That is your positive equity.<\/p>\n\n\n\n
For example, if your car’s outstanding is $5000 and your car’s value is $7000, you have positive equity of $2000.<\/p>\n\n\n\n
Once you are sure about the positive equity, you have to contact the dealer to finance the new car. The trade in value and the new car’s cost will be listed in the contract that you sign with the dealer.<\/p>\n\n\n\n
In the case of positive equity, there are not many hoops through which you have to jump. You can easily trade-in your car, which is not paid off.<\/p>\n\n\n\n
You need to keep in mind to trade in a car that is not paid off; you have to provide the dealer with some documents like:<\/p>\n\n\n\n
Only when you provide these to the dealer while trading in the car can you go ahead and trade it in easily.<\/p>\n\n\n\n
Now that you know how to trade in a car with positive equity, it is time to look at the other scenario.<\/p>\n\n\n\n
Many times, when you have bought a car with a maximum loan and minimum down payment, it might have negative equity. We will share with you such an example below.<\/p>\n\n\n\n
For example, if your car’s outstanding is $9000 and your car’s trade-in value is $8000, it means that you are down by $1000.<\/p>\n\n\n\n
The question then is, can you trade in a car with negative equity?<\/p>\n\n\n\n
Of course, You can!<\/p>\n\n\n\n
We will share the step-by-step way in which you can trade in a car with negative equity.<\/p>\n\n\n\n
Most dealers will allow you to roll over the negative equity into the loan you take for your new car. It is the most convenient option which you have. However, it will result in more interest and also a higher loan amount. Only when you’re okay with the same can you go ahead with that option.<\/p>\n\n\n\n
You need to keep in mind that your payments will be higher in that case. You have to ensure that you can handle those payments. Only then can you go ahead and trade in your car with negative equity.<\/p>\n\n\n\n
When you have negative car equity, the documents you need are almost the same as those with positive car equity. That is why the list of documents will not change much.<\/p>\n\n\n\n
However, when you have negative equity in your car, you have a few other options.<\/p>\n\n\n\n
We will highlight all the options below.<\/p>\n\n\n\n
We will highlight below all the options which you have when it comes to negative car equity. With the help of these options, you can still trade in your car with the more convenient option.<\/p>\n\n\n\n
The 1st and the most obvious option is the one which we have highlighted above. You can rollover the negative equity to a new loan.<\/p>\n\n\n\n
There are a few requirements to do the same. These include:<\/p>\n\n\n\n
The dealer should allow you to do so. Generally, lenders will roll over the negative equity into a new car loan only if you have an excellent credit score. If you are late on your previous car payments, most lenders will not allow you to do so.<\/p>\n\n\n\n
Some lenders might require you to opt for a bigger down payment as well. It is to compensate for the risk of rolling over negative equity into the new loan.<\/p>\n\n\n\n
These are generally the two requirements that you need to fulfill. Only then can you go ahead and roll over the negative equity into the new car loan.<\/p>\n\n\n\n
There are chances that your dealer might have quoted a lower trade-in value for your car. In that case, you end up having negative car equity.<\/p>\n\n\n\n
You might be thinking, what’s the solution in that case? Going with a third-party appraisal is the best option that you have in this case. However, you need to get a third-party appraisal from reputed companies like<\/p>\n\n\n\n
While the dealership has an incentive in converting you to lower trade-in value, these third-party appraiser is to not? That is why often, they will provide you with a higher appraisal value.<\/p>\n\n\n\n
Once you get a higher appraisal value on paper, you can quickly contact the dealer. You can opt for another dealer who might offer you a better deal.<\/p>\n\n\n\n
In that case, you might not have to deal with negative car equity at all.<\/p>\n\n\n\n
However, this tip can only work when the negative car equity amount is on the lower side. If the gap between the car’s trade-in value and the payoff amount is huge, even getting a third-party appraisal will not help you much.<\/p>\n\n\n\n
Nevertheless, this is a tip which can help you.<\/p>\n\n\n\n
Another option which you have is to negotiate with the dealer. Many times, the 1st trade quote which the dealer might provide you will be lower than the actual trade-in value of the car.<\/p>\n\n\n\n
However, you can negotiate a better deal with the dealer.<\/p>\n\n\n\n
With the help of the 2nd tip above, you can easily get a competing appraiser of the car. Once you get so, negotiating with the dealer becomes easy.<\/p>\n\n\n\n
If getting a higher appraisal from a 3rd party appraiser is not possible, you can contact another dealership as well. If the dealership provides you with a higher trade-in value, you can negotiate with your dealer.<\/p>\n\n\n\n
Negotiating with your dealer can undoubtedly reduce the negative equity or eliminate it. It is another tip that can help you trade in a car with negative equity.<\/p>\n\n\n\n
Not always; trading in the car is the best option. There is another alternative. You can sell it to a private buyer<\/a>.<\/p>\n\n\n\n The private buyer can undoubtedly provide you with a higher value. It might be a bit cumbersome, but it can certainly help you avoid dealing with negative equity.<\/p>\n\n\n\n The private buyer will close or take over the loan<\/a> for you. You will no longer have negative equity.<\/p>\n\n\n\n After you sell your current car or transfer the loan to a private buyer, your credit score is likely to improve as well.<\/p>\n\n\n\n