How to Trade in a Car with Negative Equity
Trading in a car with negative equity, meaning you owe more than your vehicle’s current value, can feel complicated. But with the right plan, it’s possible to move into a new ride while minimizing financial stress.
If you’re near Waipahu, Kailua-Kona, or Hilo, Hawaii, the experts at Tony Auto Group can help you understand your options and create a strategy that fits your budget.
Determine How Much Equity You Have
The first step is to determine your financial situation. Check your loan payoff amount with your lender, then compare it to your car’s current market value using an online tool or dealer appraisal.
If your car’s value exceeds what you owe, you have positive equity — great news! If it’s lower, you’re upside down or have negative equity.* Knowing your numbers upfront gives you a clear picture before visiting a dealership or exploring trade-in options.
When you bring your payoff information and trade-in estimate to us, our finance specialists can confirm the figures and help outline your choices.
Options for Handling Negative Equity
Even if you owe more than your car is worth, you still have several ways to move forward. The right choice depends on your financial goals and timeline.
Pay the Difference
If possible, cover the remaining balance out of pocket during trade. This prevents old debt from carrying over into your next loan and simplifies your new vehicle’s financing.
Roll the Balance into a New Loan
Some buyers choose to include the remaining balance in their new loan. While this can help you upgrade sooner, it increases your total loan amount and monthly payment. Calculating how this will affect your long-term costs is important before signing.
Sell Privately
Private sales often increase prices over trade-in offers, potentially shrinking or eliminating your negative equity.
Keep Your Current Vehicle Longer
If trading in isn’t urgent, holding on to your vehicle while paying the loan can help you reach positive equity. Once your balance drops below your car’s value, you’ll have more flexibility with your trade.
Trade-in With Our Team
Our finance experts can clearly explain your trade-in appraisal, loan payoff, and financing options so you understand each number and how to trade with negative equity.
We can contact your lender to confirm your payoff, apply your trade-in value toward your new purchase, and explain how taxes and fees factor into your total cost.
You can even get started online through our trade-in and financing tools — perfect for comparing estimates and planning before visiting one of our dealerships.
FAQs
Can I trade in my car if my credit isn’t great?
Yes. Many buyers with less-than-perfect credit successfully trade in vehicles with negative equity.
How can I tell if I’m getting a fair trade-in offer?
You can bring your car in for an in-person evaluation to ensure you get an accurate offer based on condition and local demand.
What happens to my old loan after the trade?
Your dealer will contact your lender and pay off the remaining balance. If there’s still a shortfall after the trade-in value is applied, that difference will either be paid by you or rolled into your new loan, depending on your chosen option.
Learn More About How to Trade in a Car with Negative Equity Today
Now that you know how to trade in a car with negative equity, contact us at Tony Auto Group near Waipahu, Kailua-Kona, or Hilo, HI, to discuss your trade-in and financing options. Our friendly team is ready to guide you step by step, so you can drive away in a vehicle you love, with a plan that fits your budget.