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How to Trade In a Car That is Not Paid Off

Woman handing over car keys


If you are looking to trade in your current car for a new MINI Cooper or for cash, we make the entire trade-in process smooth and stress-free at MINI of Warwick. Trading in a car is pretty straightforward, but what if you still have an outstanding loan on the vehicle you wish to trade? In this guide from our finance team, we’ll take a look at how to trade in a car you still owe on, so you can decide whether it’s still a good option for you.

Do You Have Positive or Negative Equity? 

So, how do you trade in a car that’s not paid off? The first thing you should do is take a look at whether you have positive or negative equity in the vehicle. Here’s what that means: 

  • 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 type of equity you have, you’ll need to know how much you still owe on your current vehicle and how much the car is worth. You can use our convenient online Value Your Trade tool to get a quick estimate on the fair market value of your car. If the value is less than the amount you owe, then it is negative equity. If it is more than how much you still owe, then it is positive. 

Having positive equity in your vehicle is the most ideal position in this situation, as the trade-in process will be easy. You will be able to trade in your current Cranston, RI-area ride without owing any amount and even have some you can use towards your next vehicle!

However, if you have negative equity, you will need to consider your options and see which one will work best for your financial situation.

Trading in a Car with Negative Equity

If it turns out that you have negative equity, how do you trade in a car you still owe on? 

You will have the choice of the following options:

  • Make up the difference you still owe after accounting for the trade-in price. This is the first option you should consider since it can easily turn your situation for the better. While not everyone will have enough spare cash to do this, it will work in your favor if you do.
  • 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. But you should be aware that transferring the amount to your new loan will increase the monthly payment, and 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, this could be the best option for you.
  • If those two options aren’t for you, then you should 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 used car companies, such as Carvana and Carmax, tend to appraise cars at higher prices, which might be able to help you to erase the negative equity in your vehicle.
  • If you still have negative equity with a higher appraisal value, then negotiate with the initial dealership you went to. Provide the dealer 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 the value 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. 

Learn More About the Trade-In Process with MINI of Warwick 

Still have questions about how to trade a car that is not paid off? Contact us to discuss your options with our finance experts. We’ll do our best to ensure that you get the best deal possible. If you are planning on putting your trade-in value toward the purchase of a new MINI Cooper, explore our new vehicle specials to take advantage of our current offers.

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