How to Trade in a Car That is Not Paid Off

Couple sitting at sales desk at dealership

When you’re upgrading your vehicle in Casper, you’ve likely heard about trading in your current car for credit towards your next car. The process is simple when the car’s already paid off, but what about when it’s not? Let the finance team at Sheridan Honda show you how to trade in a car you still owe on and ultimately determine if it is the best move for you.



Do You Have Positive or Negative Equity? 

The first step on how to trade in a car that is not paid off is to figure out if you have positive or negative equity: 

  • Positive equity: your car is worth more than what you still owe
  • Negative equity: your car is worth less than what you still owe 

To calculate which equity you have, you’ll need to know how much you still owe on your current vehicle, how much the car is worth according to Kelley Blue Book® values, and how much you are getting from trade-in offers. If the offer is less than the amount you owe, then it is negative equity. However, if it is more than how much you still owe, then it is positive. 

What does this mean? If you have positive equity, then you’re in the most ideal position in this situation, as the trade-in process will be fairly easy. You will be able to trade in your current vehicle without owing anything, and even have some leftover funds you can put toward your next car! However, if you have negative equity, you will need to consider your options and see which one will work best for your financial situation as you will still be responsible for the amount you owe on your car. 

Trading in a Car with Negative Equity

If you have negative equity, you can proceed by doing one of the following options in Cheyenne:

  • Make up the difference you still owe after accounting for the trade-in price. This is the first option that you should consider since it can easily turn your Billings situation for the better. While not everyone will have enough spare cash to do this, it will work in your favor if you do. If you can hold off trading in your car now, consider this option. 
  • Another option is to transfer the amount you still owe over to a new loan. Most people choose this option when they have negative equity and want to trade in their current vehicle that’s not paid off. However, transferring the amount to your new loan can increase the monthly payment and in the end, you will still be paying for a car that you traded in. This means that you will be upside-down in your new loan. If you can’t keep up with your current car payments and you are downsizing with a cheaper car, this could be the best option for you.

Learn More About the Trade-in Process with Sheridan Honda 

Now that you know how to trade in a car that you still owe, get started with the process in Sheridan. Find your new or used vehicle at Sheridan Honda and work with our finance experts to get all the details finalized. 


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