How to Trade in a Car That is Not Paid Off

Excited Couple Reviewing Trade in Offer with Salesman

Are you ready to trade in your current vehicle, but unsure if you can because you still have an auto loan balance? In general, the trade-in process is pretty straightforward, but it may seem daunting if your vehicle isn’t paid off. The good news is, it’s possible to trade in a car that is not paid off. Find out what you can expect and what you need to do to trade in a financed car at Honda of Mentor. Our finance team is here to help drivers throughout the Painesville area!

Trade-In a Financed Car: Determine Equity

The first step in navigating how to trade in a car that is not paid off is determining your equity in the vehicle. There are two potential equity scenarios:

  • Positive equity, in which your car’s value is greater than what you owe on your auto loan.
  • Negative equity, in which your car’s value is less than what you owe on your auto loan.

To begin, you will need to calculate how much your car is worth. You can use our trade value estimator, explore Kelley Blue Book® values, and consider trade-in offers you’ve received. From there, you compare the estimated value with your loan balance to determine equity.

Trade-In a Financed Car: Positive Equity 

If you find that you have positive equity, then you’re in the most ideal position to make a trade. That’s because you can apply the amount you receive in the trade directly to your loan so that it’s completely paid off. You can even put any money left over toward the purchase of your next vehicle. It’s that simple!

Trade-In a Financed Car: Negative Equity

Eastlake-area drivers who discover they have negative equity have a couple of options if they still wish to trade in a car that is not paid off.

  1. Pay the Difference: Pay the amount that remains on your loan out of pocket, after you apply the trade-in value. Only do this if your financial situation allows.
  2. Transfer the Difference: When it comes to how to trade in a car you still owe on, this is the more popular option. In this instance, you will transfer the amount that remains on your original auto loan to a new loan taken out for your vehicle upgrade. Keep in mind that this option may increase your monthly payments. You will also be paying for a car you no longer have.

Learn More About the Trade-in Process with Honda of Mentor 

Do you still have questions about how to trade in a car that is not paid off? Reach out to the finance experts at Honda of Mentor for assistance. We can help you decide the best path forward based on your unique situation. Best of all, when you trade in that old ride and upgrade to a new model at Honda of Mentor, you’ll secure the Honda Service Pass benefits! This program offers complimentary maintenance for 2 years/24,000 miles! Get in touch with our expert team to learn more!


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