How to Trade in a Car That Is Not Paid Off

Can you trade in a car that isn’t fully paid off yet? Yes! Here’s how.

Dealerships Take Over Trade-in Payments

In this case, the dealership will take on the rest of the payments. They should do the legwork for you, so that you don’t have to even call the bank. (Although it’s still smart to call and verify after the process that everything went smoothly.)

Obviously, you give up any claim to the car. The dealership with whom you trade it in will pay it off and they’ll get the title. That means they can sell it themselves, either to another buyer or dealer.

Trade-in Value Depends on How Much is Owed

This isn’t a way to get out of car debt, however. If you owe $10,000 but your trade-in value is only $9,000, the extra $1,000 will be added to the price of the car you’re buying instead.

By the same token, if you owe $10,000 but your trade-in value is $11,000, then you’ll get that $1,000 taken off the price of the car you’re buying.

Do not expect your trade-in value to be the full trade-in value of the car. After all, the dealership is taking on a portion of what’s owed on it. Your trade-in value will reflect that.

Negative Equity May Be Rolled into a Car Loan

Now, if you end up owing more on the car than you get for it as a trade-in, you can have that rolled into a car loan. If the additional amount you owe is very large, dealerships may be hesitant to roll this into a loan. Many elements may influence this.

Condition of a Trade-in Always Matters

Remember that the condition of the car can influence trade-in value as well. If the car has dents, previous damage, or needs repair, then its value as a trade-in won’t be assessed as highly. Always clean the car up and make it look presentable when bringing it in for a trade-in assessment, but also understand that its condition impacts its value.

This is how to trade in a car that isn’t fully paid off. Don’t feel sheepish or shy doing this; it’s very normal. If any part of the process confuses you, remember you can always ask to have it explained more in-depth.