How to Trade in a Car if You Still Owe on It

A vehicle trade-in at a dealership is a great way to sell your vehicle and purchase or lease a new model – all in a single location. We recommend using our Mazda payment calculator if going this route.

However, what if you still owe payments on the car? Can you still trade in your vehicle under this scenario?

Trading a Car That You Haven’t Fully Paid Off

The short answer is yes. You can indeed trade in your current car even if you still owe money on it. In fact, this is fairly common. The process works in one of two ways depending on whether you have positive or negative equity on the vehicle.

Positive Equity

You have positive equity if the car’s value exceeds the amount you owe on the vehicle. In this instance, the dealership pays off your remaining balance, then buys your vehicle. If the car is worth $5,000, and you owe $2,000, that’s a positive net balance of $3,000. That $3,000 is deducted from your car purchase or lease.

Negative Equity

You have negative equity if the amount you owe exceeds the car’s value, meaning you end up with a negative balance. Let’s say the car is worth $5,000, and you still owe $6,000. That’s a negative $1,000. If you trade in your vehicle to the dealership in this instance, the additional $1,000 is rolled into your loan.

Having a negative equity is not ideal, as it means taking out a greater loan with more interest. If manageable, try to pay off your car, or at least strive for a positive equity.

At Superior Mazda, our dealers will be more than happy to walk you through the trade-in process whether you have a positive or negative equity. Trade it for a new vehicle like the Mazda CX-9.