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How to Trade in a Car That is Not Paid Off

Tiny car behind coins


If you live in the Nashville area and you’re looking for a new car, you might be considering trading in your current vehicle at the dealership. This gives you a few different options like trading up to a new or pre-owned vehicle, or receiving cash to put towards the car of your choice. However, if your car isn’t fully paid off, you might be wondering if you can still trade it in. The answer is yes! The finance team at Music City Autoplex has everything you need to know about how to trade in a car that you still owe on in the guide below. Also, learn what you should do before trading in a car with these helpful tips!



Do You Have Positive or Negative Equity?

While it’s possible no matter what to trade in a car that isn’t fully paid off, you’ll first need to determine whether you have positive or negative equity. This 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

The process of determining your equity is relatively straightforward. There are three factors that you’ll have to consider: how much you owe on your vehicle, how much the car is worth, and how much money you’d be getting from a trade-in offer. If you owe less money than what you’re being offered, then you have positive equity. If the offer won’t cover the amount of money you still owe, then it’s negative. Being in positive equity is the easier of the two options—you can trade in your vehicle without owing any more money on it, and you’ll have a bit of money to spend on your next Hendersonville ride.

However, if you’re in negative equity and owe more than your car is worth, don’t despair. You still have options—just make sure you carefully review your financial situation before making any decisions.

Trading in a Car with Negative Equity

If you have negative equity but still want to trade in your current vehicle at the dealership, you have a few options you can take:

  • Make up the difference you still owe. This is the most straightforward option and will clear away the debt you owe right away. If you have the spare cash to do this, we strongly recommend you go this route.
  • Transfer the amount you still owe over to a new loan. While this is a viable option for many drivers, it means that you’ll be increasing your monthly payments and continuing to pay off a car you no longer drive. If you’re downsizing and your next vehicle is cheaper than your current ride, this might be the right choice for you.
  • Work with a third party and compare trade-in offers. Some third-party used car companies will appraise vehicles at higher prices than other dealerships, so you may get a better offer than the initial buyer.
  • Negotiate with the initial dealership you went to if you have a higher appraisal value. If you’ve gotten a better offer from a third-party company, you can always return to your initial dealership and present them with the offer so they can match it.

Learn More About the Trade-in Process with Music City Autoplex

If you want to learn more about trading in a car that’s not paid off, feel free to contact our office anytime! Our finance team is happy to answer any questions you might have about the trade-in process. You can also stop by our dealership to see our inventory of pre-owned vehicles and take one out for a test drive around Clarksville. If you want to value your trade before coming to the dealership, you can do so right from our website!


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Music City Autoplex 36.269330, -86.710610.