Can I Trade In My Car if I Still Owe Money On It?
Do you currently owe money on your current vehicle but still want to trade it in for a new car? Whether you simply need a larger vehicle for your growing family or you’re simply looking to make the switch to Honda, owing money on an existing auto loan shouldn’t stand in the way of your goals. At Germain Honda of Beavercreek, we’re here to tell you that yes, you can still trade in a vehicle that you still have a remaining balance on. Ultimately, the decision is up to you and your financial goals but our team is standing by to help provide you with options and information you need to shop smarter.
Negative vs Positive Equity Explained
The concepts of negative and positive equity are important to understand when you’re considering trading in a vehicle that you still owe money on. An example of positive equity is when the trade-in value of your car is higher than your payoff amount. In these cases, you’ll be able to cover the remaining balance of your auto loan and still have some leftover to put towards your new car.
Conversely, negative equity situations occur when you owe more on your car than it’s worth when trading it in. Also known as being “upside-down” on your loan, it’s not as favorable as a situation but it’s still possible to trade the vehicle in. You’ll simply have to come up with the difference in cash up front or you may have the option to roll it into a new loan on your new car. For situations where you’re downsizing to a cheaper vehicle, the difference may be negligible. If the gap remains quite wide, it might be smarter to wait until you’ve paid more of the remaining balance on the loan.
Germain Honda of Beavercreek Is Here to Help
Don’t let a remaining auto loan balance stop you from getting behind the wheel of your next new Honda! Our team of finance experts at Germain Honda of Beavercreek have the tools and expertise necessary to provide you with all of your available options, helping you make an informed decision. We’re always paying top dollar for quality pre-owned vehicles just like yours, helping you maximize your savings. We invite you to use our handy Value Your Trade tool to get a competitive, real-time offer for your current vehicle. Still have questions? Our team is standing by to help. Below, you can browse a selection of our top car-buying advice topics.