How to Trade in a Car That is Not Paid Off

Couple looking over paperwork in a dealership

A Porsche trade-in is a relatively straightforward process: Porsche Mechanicsburg wants to buy your car so you can put the money towards a new model! But, what if you haven’t paid off your current car? If you know how to trade in a car that is not paid off, you’ll know that it only requires a few extra steps to trade in your old car and hit the streets of in something new. The finance team at Porsche Mechanicsburg can help you understand how to trade in a car you still owe on.

Do You Have Positive or Negative Equity?

The first part of understanding how to trade in a car that is not paid off is determining if you have positive or negative equity. What does this mean:

  • 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 find out where your equity stands, find the equity information on your most recent loan statement, then get an estimate of the value of your car. Resources like Kelley Blue Book can show you how much similar cars have sold for in the area. If the estimated value of your car is less than the amount you own, you have negative equity, which makes it a little more complicated to trade in a car you still owe on. Take a look at your options if you find yourself in this situation.

Trading in a Car with Negative Equity

For drivers who have negative equity, how do they trade in their car that’s not paid off? You have two options:

  • Make up the difference you still owe after accounting for the trade-in price. This is the preferable option for most buyers. If you have enough cash on hand to pay off your current car loan without getting fined, you’ll be able to pay off your current car and be done with it.
  • Transfer the amount you still owe over to a new loan. The method works, but it means your monthly payments are likely to be higher. You’ll essentially be paying off your old and new cars at the same time, which will likely make you upside-down in your new loan. The only time this is a good financial move is if you have to lower what you spend on auto payments every month and downsizing to a less-expensive car is necessary. .

No matter which options you end up going with, Porsche Mechanicsburg recommends you to always read the contract carefully before signing the new car loan.

Learn More About the Trade-in Process with Porsche Mechanicsburg

From learning how to sell your car to a Porsche dealer to how to trade in a car that is not paid off, the team at Porsche Mechanicsburg is here to help make your car-buying process as easy as possible. Visit our car-buying tips for more information.

 

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