How to Trade in a Car That is Not Paid Off

Excited Couple Reviewing Trade in Offer with Salesman

When South Riding drivers go to buy a new or pre-owned vehicle, many plan on trading in their current vehicles for an extra boost on their down payment or cash. The trade-in process for a car that’s already paid off is straightforward, but what about a car that you’re still paying for? Can you trade in a car that’s not paid off? Find out more about the process and all your options with Mercedes-Benz of Chantilly’s finance team and how to trade in a car you still owe on.



Do You Have Positive or Negative Equity? 

Before trading in your car, you must first determine what situation your current car loan is in. You will either have:

  • Positive Equity: Your car is worth more than your remaining loan amount
  • Negative Equity: Your car is worth less than your remaining loan amount

To figure out which situation you’re in, you’ll need your current loan balance and your car’s current value. Finding out your car’s estimated value is easy when using our Value Your Trade tool, which is powered by Kelley Blue Book®. If the estimated offer you receive from that tool is less than the amount you owe, then you will have negative equity. If it’s the other way around — your car’s estimated value being higher than what you currently owe on your loan — you have positive equity.

Positive equity is the best situation to be in, as your car’s value will be able to trade in your vehicle without owing anything on your loan. You may even have some leftover money to put toward your new car! However, if your equity is negative, there is a little more work to do to make sure you can pay off your loan balance and still trade in your vehicle. 

Trading in a Car with Negative Equity

So, if you have negative equity, can you still trade in a car that’s not paid off? Yes! Centerville drivers have a couple of options available to still trade in their vehicle. Which one works will depend entirely on your financial situation.

  • Get Your Trade-In Offer; Make Up the Difference: Once you have the trade-in value, see how much is left on the loan and pay it off immediately. This isn’t always possible as not everyone has that much cash on hand, but it is the safest financial option.
  • Transfer the Amount You Still Owe to Your New Loan: You can transfer the difference in trade-in value to your new car loan. However, this will increase your monthly payments and you’ll still be paying for a car you no longer own. Should something happen to your new car, you could also be stuck paying a loan well above what the car was worth thanks to the added balance. If the reason for trading in your current vehicle is to downsize, though, you transferring the loan amount to a smaller loan can actually decrease your monthly payments and may be the best option.

Regardless of which option you choose, consult with our finance team and read all the fine print before signing anything over. Ensure you’re making the best financial decision for your budget!

Learn More About the Trade-in Process with Mercedes-Benz of Chantilly 

Now that you know how to trade in a car that’s not paid off, reach out to Mercedes-Benz of Chantilly in Chantilly to get the process started! Our team will work with you to get you the new or pre-owned vehicle that fits your budget and Ashburn lifestyle.


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