Can I trade my car if I'm behind on payments?
Asked by: Abe Jones DVM | Last update: September 22, 2025Score: 4.6/5 (72 votes)
Can you trade a car in if you're behind on payments?
You can still trade in your car with negative equity, but you'll still be responsible for paying off the difference. Your dealer will typically roll your remaining balance into a new loan which makes your monthly payments greater. To calculate your equity, first you'll want an idea of how much your vehicle is worth.
Can you sell a car if you're behind on payments?
You'll need to pay the loan in full before the lender will release the lien and title—allowing you to resell the vehicle to another party. If you're planning to sell a vehicle that you still owe money on, talk to your lender first to find out how to proceed.
Is it smart to trade in your car when you still owe?
It won't affect the value any. People trade in cars they still owe on all the time. You'll agree on a trade value with the dealer and they will pay off your loan for you, and the rest of the trade value will go towards the new car.
Will Carvana buy my car if I'm behind on payments?
If your vehicle is worth more than you owe, we'll pay you the difference, or you can apply it toward the purchase of your next vehicle from Carvana. Until the sale of your vehicle to Carvana is completed, please continue to make your normal loan payments to avoid late payment penalties with your lender.
How to Trade in a Car you Owe Money on or is NOT Paid Off (Former Dealer Explains)
Can I give my car back if I can't make payments?
Voluntarily Surrender the Car
That said, if there's a deficiency balance—your loan balance minus what the lender received for your car at auction plus any additional fees—you'll need to pay it. If you can't, the lender may send the remaining debt to collections, which can damage your credit further.
Can I trade-in my car to avoid repossession?
However, if you're unable to make your car payments and want to avoid repossession, trading in your vehicle for a less expensive one can help.
Will a dealership buy my car if I still owe money?
A common question we encounter is "will a dealership buy my car if I still owe?" It is definitely possible to trade in even if you are still paying your auto loan for that vehicle. However, trading in a car you still owe on might be slightly more challenging and may end up being costly if you are not careful.
What should you not say when trading in a car?
Telling a salesperson upfront that you have a trade-in adds another ingredient to the car-buying stew they'll cook up for you. The more numbers you have in the game, the more chances they have to manipulate the final price or monthly payment.
How to get rid of your car if you still owe money on it?
Selling a vehicle and using the proceeds to pay off the loan in full can help you eliminate the debt without hurting your credit. You might also consider trading in the vehicle and rolling negative equity into a new car loan to avoid credit score damage; however, that can leave you with more debt to repay.
How do you trade in a car that is not paid off?
If your car's trade-in value is more than your current loan balance, then you're all set—you can just pay off the old loan and apply the difference toward the cost of your new vehicle. But if you owe more on your car than its trade-in value, then you'll have to make up the difference.
What happens if the repo man never finds your car?
What Happens If the Repo Agent Doesn't Find Your Car? But if you make it hard for the repo agent to get it, then the creditor may use another method to get the car back, called "replevin." Replevin can be just as costly as a repossession, if not more so.
How to get repo fees waived?
You may give the vehicle back to the lender. This is called a voluntary repossession. Not only can it save you the repossession fee, the lender may also agree to waive the deficiency balance and not report it as a repossession on your credit report.
Can I trade my car in if I still owe on it and have bad credit?
Yes, you can usually trade in your car even if you still owe money on your existing car loan. However, consider a few factors first. Negative equity. If you have negative equity, the remaining balance on your old loan will be rolled over into your new loan, potentially increasing your monthly payments.
Can I refinance my car if I am behind on payments?
If you have improved your credit and can get a better interest rate, refinancing can be a great option, as long as you consider any additional fees required. If you've fallen behind on a few payments and aren't current in your loan, refinancing is not the answer and is most likely not an option.
Will the dealership buy my car without trade?
You can typically sell your car to a dealer even if you have no intention of buying a vehicle from them. Dealerships acquire used cars from many sources aside from trade-ins, including auctions, car rental agencies, and private parties.
Should I fix up my car before trade in?
Large or financially costly repairs like rebuilding or replacing a transmission, replacing a cooling system, and more, are best avoided. Fixing major issues for minor dollars when you trade-in your vehicle as-is with larger issues is part of how dealerships can profit from buying and reselling used cars!
Do car salesmen really talk to managers?
For decades now, car salespeople have constantly gone to “talk my manager” for permission to negotiate during the sales process. This tactic, paired with countless other dealer antics is very frustrating for customers. If you're unfamiliar with your salesperson saying “let me go check with my manager,” you're lucky!
When should you not trade?
Market close/open.
It's a good idea to avoid these or be wary around these times. At market close a number of trading positions are being closed. This will lead to volatility in the currency markets which can then cause price to move erratically. The same applies at market open.
Can I trade in my car if I owe $27000 on it?
In most instances, yes, you can trade in a car with a loan, and some dealers might roll your remaining balance into a new loan. But trading in your car doesn't make your loan disappear. You will still have to pay off the remaining loan balance that your trade-in amount doesn't cover.
How can I sell my car if I still owe money on it?
Can you sell a car with a loan? You can sell a car with a loan but you'll need to give the full payoff amount to your lender before they'll release the car title. You can do this with your funds after you complete the sale, or you can refinance your car loan or apply for a personal loan.
Will Carmax buy my car if still owe money?
Yes, we do. In most cases, the selling process is very similar to any other financed car. We'll appraise the car, then contact your leasing company for a payoff quote and process any equity you might have.
Can I trade my car in if I'm late on payments?
Yes, you can trade in a car that is not paid off. But if you owe more than your car is worth, it can be costly to do so. If you're trading in a car you still owe money on, one of the following two situations apply: You have positive equity.
Can I sell my car to a dealership if I'm behind on payments?
The car is collateral for the loan, and until the loan is fully repaid, the lender holds a lien on the vehicle. So, can you sell your car back to the dealership if it's still under finance? Yes, you can.
Will a dealership always accept a trade in?
Some dealerships may not be willing to trade certain vehicles depending on the situation or the vehicle involved. Examples include when a particular vehicle is limited in supply or when it is in high demand. In such situations, most dealerships may not be willing to give up their vehicles.