How to Trade in a Car That’s Not Paid Off

August 3rd, 2021 by

Tiny car with coins and finance paperwork

Many people ask us here at Ocean Honda of Burlingame whether they can trade in their vehicle that still has outstanding payments on the loan. Can you trade in a car that’s not paid off? Absolutely! How do you do it? Keep it with us below to read more about how the process usually works. Then, when you’re ready, check out how to trade in and buy a new car from home!

How Does Trading in a Financed Car Work?

There are several steps you generally must take in order to trade in a financed vehicle. Here’s what to do:

  1. Figure out what the remaining balance on your loan is. Usually, it’s listed on your monthly statement.
  2. Use our Value Your Trade tool or find one online to get a good estimate of what your vehicle might be worth. Remember, your car will eventually need to be inspected at our service center so you can be presented with an official offer.
  3. If the remaining amount on your car loan is less than the trade-in offer from the dealership, then you’ll have money left over that will go toward purchasing a new car from the dealer! However, if it’s not, you’ll have to pay off the remainder, or negative equity, unless we roll over the loan — more on that below.

What Does “Rolling Over” a Loan Mean?

Rolling over a loan happens when a car dealership says they will pay off your old loan no matter how much you owe on it. Basically, even if the dealer does pay off your vehicle, what generally happens is that the amount paid off gets tacked onto your new auto loan, meaning you’re not quite off the hook for paying it off, it just is added into the terms of your new loan. This could work out in your favor if your interest rate was higher with the old loan, or not. That’s why we always recommend talking to our finance specialists about the best option for you.

Rely on Ocean Honda of Burlingame for Your Next New Car!

We can help you get into the perfect new vehicle for your unique needs, whether you’re looking to roll over an old loan and trade in your financed vehicle or you’re just at the stage of figuring out your options. Call 650-395-2720 or visit us in Burlingame today to learn more!


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