Trading In a Vehicle When You Still Owe Money: Explained

Many Wallingford motorists have likely heard of trading in their automobiles at dealerships for a brand-new vehicle or cash. While the trade-in procedure is quite basic when the vehicle is paid off in full, there may be additional steps if the vehicle is still under a finance agreement. So, we made a guide on how to trade in a car you still owe on. Find out from the finance department at Hamden Chevrolet how to trade in a car that is not paid off. 

Do You Have Positive or Negative Equity? 

To establish how to trade in a car that is not paid off, you must first identify which of the two categories you fall under: 

• Positive equity: The value of your automobile exceeds the amount still owed.
• Negative equity: The value of your vehicle is less than what you still owe.

To determine how much equity you have in your existing vehicle, you’ll need to know how much you still owe, how much the car is worth according to Kelley Blue Book® values, and how much you’re receiving in trade-in offers. Negative equity exists when the offer is less than the amount owed on the vehicle. If it exceeds the amount you still owe, however, it is positive.

If you have positive equity, you are in the best position in this situation, since the trade-in procedure will still be rather straightforward. You will be able to trade in your existing Milford vehicle without owing a dime and even have credit toward your future vehicle!

However, if you have negative equity, you will need to evaluate your alternatives to determine which one is most suitable for your financial circumstances.

Trading in a Car with Negative Equity

How can drivers in North Haven who have negative equity trade in their unpaid-for vehicle? There are several choices available:

• Determine the difference between the trade-in price and the amount you still owe. This is the first option you should examine, as it can quickly improve your position. It will work to your advantage if you have enough extra money to accomplish this, though not everyone will.
• Another alternative is to transfer the remaining balance to a new loan. Most individuals pick this option if they have negative equity and wish to trade in a car with an outstanding balance. However, shifting the sum to your new loan may increase your monthly payment, and you will ultimately continue to pay for the vehicle you traded in. In other words, you will be underwater on your new loan. This might be the greatest alternative for you if you are unable to maintain your existing auto payments and are purchasing a cheaper vehicle.

No matter which options you end up going with, the Hamden Chevrolet finance department recommends you always read the contract carefully before signing the new car loan. 

Learn More About the Trade-in Process with Hamden Chevrolet 

Still have questions about how to trade in a car that is not paid off? Contact the financial professionals at Hamden Chevrolet immediately so we can assist you. If you desire a new-to-you vehicle in the Hamden area, you should likely wait until you have paid off your current vehicle.