How to Trade in a Car That is Not Paid Off

Car dealer giving car key to buyer


Can you trade in a car that’s not paid off? Yes, it’s certainly possible to offload a car that you still owe money on. You can trade-in your current car to most dealerships around Rye for another vehicle today—even if you have negative equity. Still, if you do owe money on your vehicle, the trade-in process becomes a little bit more complex. We’ve covered everything you need to know before you visit a dealership to start your trade-in.

Why Does Positive vs. Negative Equity Matter?

First of all, what is positive or negative equity, and why does it matter in Stamford and beyond? Below are the definitions:

  • Positive equity: This is when your vehicle is worth more than you owe on it.
  • Negative equity: This is when your vehicle is worth less than you owe on it. Some people call it “being upside down” on your auto loan. 

To determine whether you have positive or negative equity, find out how much you owe on your vehicle and then find out how much it’s worth. Use online tools, such as Kelley Blue Book® or our value your trade tool to get an estimated trade-in price. Then take your car to some dealerships in the New Canaan area to see how much you could receive. If they offer you less than the amount you still owe on your car, you’re in a negative equity situation. But, if they offer you more than you owe on your car, you have positive equity!

Positive equity is best because the trade-in process will be easier. It allows you to trade in your current car, pay off the remainder of your loan, and put the additional money towards your next car! But, if you find you have negative equity, you still have options and can trade-in your car.

Trading in a Car with Negative Equity

If your vehicle is worth less than what you owe and you still want to trade it in, consider these options:

  • Transfer the amount you still owe to a new loan. Most people in Greenwich with negative equity prefer this option. But, transferring your current loan balance to your new auto loan will raise your monthly payment and your new loan balance; you’re practically guaranteed to start with negative equity if you take this path. Still, if you’re struggling to make your current loan payments and want a cheaper car, this may be your best option.
  • Pay the difference between what you still owe and your trade-in funds with cash. This is the best idea because it makes it easier to negotiate on your next car and secure a monthly payment that works for your budget.
  • Go to multiple dealerships and negotiate to make sure you’re getting the best price. Keep every offer you receive, and save the best ones for the negotiating table.
  • Wait to trade in your vehicle until after you pay off the balance of your loan. Sometimes waiting is the best solution.

Whatever you decide to do, Mercedes-Benz of Greenwich strongly suggests that you take time to review your contract carefully before signing any new car loan paperwork. 

Trade-in Your Car at Mercedes-Benz of Greenwich 

So yes, you can trade in a car that you still owe money on. Feel free to chat with our finance experts if you still have questions. We invite you to browse our new car inventory to get a better idea of what you can afford, and then use our payment calculator to get an idea of your monthly payment. You can also apply for financing online, so get in touch with us today.

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