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How to Trade in a Car That’s Not Paid Off

2021 Honda Insight LX taking a turn


Plenty of Waterbury drivers know that it’s easy to trade in a car at Honda of Watertown. But what if you haven’t paid off your car but you still need to trade it for another vehicle? The process to trade in a car that’s not paid off is a bit more complicated than trading in a car that’s been paid off, but it’s not impossible. The finance team at Honda of Watertown is here to help you learn how to trade in a car that’s not paid off. 

Do You Have Positive or Negative Equity? 

If you want to trade in a car that’s not paid off, the first thing you need to determine is whether your car has 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 

You can get an idea of if you have positive or negative equity with the help of our Value Your Trade-In tool. Just enter some information and you’ll get an estimate of your vehicle’s value. Or, if you want an exact number, contact Honda of Watertown and make an appointment for a free car appraisal.

Once you have at least an estimate of your car’s value, compare the number to what you still owe on your auto loan. If the estimate or appraisal is less than the amount you owe, you have negative equity. If the estimate is more than the amount you owe, you have positive equity, which makes it easier to trade in your vehicle. You will be able to trade in your current Southbury ride without owing any amount. You can put the difference toward you new vehicle or take it as cash. 

How to Trade in a Car That’s Not Paid Off & Has Negative Equity

When you have negative equity in Torrington, you have several options to trade in a car that’s not paid off: 

  • Pay off the difference between your car’s value and what you owe. This is the ideal option, because it wraps up your old loan before you start your new one. It does require having cash available, though. 
  • Transfer the amount you still owe over to a new loan. This is the most common option for drivers with negative equity, even though it will increase your monthly payments on your new car. That’s called being upside-down on your new loan. 
  • Work with a third party and see how the trade-in offers compare to the ones you have gotten from your local dealerships. Third-party car companies like Carvana and Carmax often appraise used cars at higher prices. Give them a try and see if they make a high enough offer to change your negative equity to positive equity. 
  • Negotiate with the initial dealership you went to. Bring the offers you received from the third-party companies with you and use them to negotiate a better price. If the dealer can’t match the offer, ask the dealer for the value of what you still owe. This will let you sell your car outright to the third-party dealer without transferring an old loan amount to your new loan. 

With any of these options, make sure you carefully read the contracts.

Trade in Your Vehicle with Honda of Watertown

At Honda of Watertown, we would love to work with you to help you get a great trade-in value for your vehicle. If you’re looking to trade in a car that’s not paid off so you can find a less expensive vehicle, look for an excellent deal in our used vehicle inventory.

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