Can I Trade In My Car if I Still Owe Money On It?

Can I Trade In My Car if I Still Owe Money On It? - Germain Toyota of Columbus

Are you eager to trade your current vehicle in for a new ride but still owe some money on it? No matter if you’re searching for a larger vehicle for your growing family, something more fuel-efficient, or if you simply want to make the switch to Toyota – owing money on your existing vehicle shouldn’t stop you from upgrading to a new vehicle! Germain Toyota of Columbus is here to tell you that yes, you’re able to trade in a vehicle that you still owe money on. While the decision is ultimately up to you, our team is here to help explain your options and help you make an informed buying decision.

Toyota Sequoia

Negative vs Positive Equity Explained

Understanding the concepts of positive and negative equity is helpful when you consider trading in a vehicle that you still owe money on. A situation where you would have positive equity involves the current trade-in value of your vehicle exceeding the payoff amount. Here, you could potentially cover the remaining balance of your loan and still have additional funds remaining to put down toward your new vehicle.

On the opposite end of the spectrum, negative equity occurs when you owe more than your car is worth when trading it in. This is commonly referred to as being “upside-down” on your loan and can put you in an unfortunate position when trading the vehicle in. In these types of situations, you’ll either have to come up with the difference in cash or you could have the option to roll the negative equity into a new loan on your new car. In instances where you’re downsizing to a cheaper vehicle, the difference can be negligible. If the gap is quite large, it might be a better idea until you’ve paid off more of the loan balance before switching vehicles.

Germain Toyota of Columbus

Germain Toyota of Columbus Is Here to Help

Just because you have a remaining balance on your auto loan doesn’t mean that you can’t get behind the wheel of a new Toyota! Our finance experts at Germain Toyota of Columbus have all the resources and experience necessary to discuss your available options. In addition, we’re always looking for quality used vehicles just like yours and are paying top dollar for them. To help maximize your savings, you can take advantage of our handy Value Your Trade tool to get a competitive offer based on real-time data. Still have questions? Our team is standing by to help. Below, you can browse a selection of our top car-buying comparisons and resources.