How to Trade in a Car That is Not Paid Off

The process for how to trade in a car that’s financed is not altogether difficult. While the prospect of doing so aggravates many Providence car shoppers to exhaustion, there’s really no need for this. In fact, trading in a car that’s not paid off is very similar to trading in a vehicle that is paid off, with a few exceptions. Read on or contact us to learn more.

Step 1: Determine if You Have Positive or Negative Equity

To see how you can trade in a car that’s not paid off, the first step is to see which one of these situations applies to you near East Greenwich:

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

Looking to calculate your level of equity? It’s easy. Figure out how much you owe on your loan. Normally, your loan servicer / financier has this information, or it may be listed on your car payment bills.

Next, figure how much the car is worth according to fair market value. Get a trade-in offer. If your offer is more than your loan, congratulations — you have positive equity. Hoping to maximize your vehicle’s trade-in value? Major pre-trade fixes may not offer a significant return, but minor repairs and detailing can be helpful.

However, if you have negative equity (your loan is worth more than your offer), then you will need to consider your options, like loan rollover. Most dealers, including us here at Mercedes-Benz of Warwick, will be happy to help you get into a new vehicle if you pay off your outstanding loan balance first. We may even be able to roll over your loan balance if you have negative equity. Just ask!

How to Trade in a Car with Negative Equity

Here’s more information on how to trade in a car that’s not paid off when you have negative equity in said vehicle:

• Pay the Balance You Owe Off. Not everyone will have enough spare cash to do this, but it will almost always work in your favor if you do.
• Transfer the Amount Owed to a New Loan (Rollover). 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. In other words, this will make you 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, though, this could be a tempting choice
• Get More Trade-In Offers. Third-party pre-owned car companies, such as Carvana and Carmax, tend to appraise cars at higher prices, which might be able to help you remedy your negative equity situation if it’s only a matter of a few hundred or maybe even a thousand dollars.
• Negotiate With Your Initial Dealership. Provide them with the offer you got from a third-party company and ask them to match it. If they cannot match it, you can try to ask the dealer for some of the difference you still owe, so you can sell your car outright to the third-party company while having the difference transferred to your new loan.

No matter which option you choose, the Mercedes-Benz of Warwick finance center always recommends that you read the contract carefully before signing any car loan.

Learn More About Trade-In Cars With Mercedes-Benz of Warwick

Want to learn more about how to trade-in your vehicle or purchase a new vehicle the easy way near Cranston? Mercedes-Benz of Warwick is happy to help! Call (877) 361-2955 for additional information. Meanwhile, be sure to browse all of our handy car buying tips.