How to Trade in a Car That is Not Paid Off

If you’re looking to upgrade to a new vehicle, you may be interested in trading in your current one for cash or money towards a down payment. But, if you still owe money on your car, can you trade in your vehicle? Yes! While it’s not as straightforward as trading in a car that is paid off, you can trade in a vehicle you still owe on. Let BMW of Murrieta’s finance team guide you through the basics of how to trade in a car you still owe on, and put yourself on the path towards your next car, truck, or SUV in Corona!

Do You Have Positive or Negative Equity? 

Before learning how to trade in a car that is not paid off, you’ll need to know what situation your current car loan is in. You will be in one of these two situations:

• Positive Equity: Your car is worth more money than the amount you still owe on your loan.
• Negative Equity: Your car is worth less money than the amount you still owe on your loan. 

To get an idea of your car’s current value, use reputable sites like Kelley Blue Book or BMW of Murrieta’s Value Your Trade tool. Once you have an estimate, compare it to what you still owe on your current car loan to see what kind of equity you’re bringing to the table. 

If you have positive equity, you’re in an ideal position to trade in your car! The trade-in value will cover the rest of your car loan and give you some extra money to put toward your next Riverside ride. If you have negative equity, however, your situation may be more complicated. 

Trading in a Car with Negative Equity

While it’s not impossible to trade in a car with negative equity, it will require crunching some numbers to make sure it makes sense for your financial situation. Here are the options available to you if you’d still like to trade in a car that is not paid off with negative equity:

• Make Up the Difference: The first option you should consider is to pay off the difference between the trade-in value and the remaining loan amount. This will free you of any financial obligation to the lender and allow you to start fresh on your next vehicle. However, the difference is often in the thousands of dollars, and it may not be a feasible option for many Ontario drivers.
• Transfer the Leftover Amount to a New Loan: Most who end up trading in a car they still owe on end up transferring the leftover car loan amount on the previous vehicle over to their new car loan. While this does eliminate the need for immediate payment, this will increase your monthly payment and could put you back into a negative equity position. However, if you’re downsizing from a truck to a sedan or a new to a used model, you may find that this option is cheaper than continuing to pay for a vehicle you no longer need.

Whichever option you choose, always read the contract in full before signing anything. BMW of Murrieta’s financial experts are here to walk you through your new loan terms and help you make the decision that’s right for you!

Trade In Your Car With BMW of Murrieta!

Now that you know how to trade in a car that you still owe on, reach out to BMW of Murrieta to start the process! Our Murrieta team will be happy to help you find a new, used, or certified pre-owned vehicle that works for your budget and your trade-in situation and value.