How to Trade In a Car That Is Not Paid Off
Drive with Babar – Canada’s Trusted Name in Pre-Approved Vehicles
Thinking of upgrading your ride, but still have a balance on your current car loan? You’re not alone. At Drive with Babar, many of our customers ask us:
“Can I trade in my car if I haven’t paid it off yet?”
The answer is yes — but there are a few important things to understand first. In this guide, we’ll walk you through everything you need to know about trading in a car with a loan, and how to make the smart move financially.
Can You Trade In a Car You Still Owe Money On?
Yes, you can. But the process depends on one major factor:
Do you have positive equity or negative equity?
Let’s break that down.
Understanding Equity in Your Car
Positive Equity
This means your car is worth more than what you owe on it. For example:
- Your car is worth $22,000
- You owe $17,000
- You have $5,000 in positive equity
In this case, the equity becomes a down payment on your next vehicle. This is the ideal situation.
Negative Equity
This means you owe more than your car is worth. For example:
- Your car is worth $15,000
- You owe $20,000
- You have $5,000 in negative equity
This is also called being “upside down” on your loan. It’s still possible to trade in, but you’ll need to pay the difference — or roll it into your new loan.
How the Trade-In Process Works (With an Existing Loan)
Here’s how to trade in your car if you haven’t paid it off:
1. Check Your Loan Payoff Amount
Contact your lender and request a payoff quote — the total amount required to pay off your loan today, including any interest or fees.
2. Estimate Your Car’s Trade-In Value
Use online tools like Canadian Black Book, Kelley Blue Book Canada, or ask for a quote at Drive with Babar. We’ll give you a fair, competitive offer — even if your loan isn’t finished.
3. Calculate Your Equity
Compare the estimated value of your vehicle to your loan payoff amount.
- If value > loan = positive equity ✅
- If loan > value = negative equity ❌
4. Decide What to Do with Negative Equity (if any)
You have a few options:
- Pay the difference upfront
- Roll the difference into your new loan (if approved)
- Wait and pay off more of the loan before trading in
At Drive with Babar, our finance experts can walk you through the best option based on your credit, approval, and budget.
5. Get Pre-Approved for Your Next Car
Before finalizing your trade-in, get pre-approved with us. We’ll show you financing options that account for your equity situation, and ensure you’re in a better financial position than before.
Example Trade-In Scenario
Let’s say you have:
- A 2021 SUV worth $20,000
- You owe $23,000
- You want to trade it in for a $28,000 car
Option 1: Roll Negative Equity into New Loan
You roll the $3,000 shortfall into your new loan:
- New loan becomes $31,000
- Monthly payments may increase slightly
- But you’re out of the old loan and into a newer, more reliable car
With Drive with Babar, this process is streamlined — and we’ll work with lenders who understand these situations.
Tips to Maximize Trade-In Value
- Clean and Detail Your Car – A better presentation = better offer
- Fix Minor Issues – Small repairs can increase value
- Bring Maintenance Records – Shows you’ve taken care of the vehicle
- Don’t Miss Payments – Stay in good standing with your lender
- Shop Around – Get multiple quotes or bring your car to Drive with Babar for a fast, honest appraisal
Why Trade In with Drive with Babar?
At Drive with Babar, we specialize in pre-approved vehicles and smart financing solutions, especially for Canadians who:
- Still owe on their current vehicle
- Have negative equity
- Need to upgrade into something more reliable
- Want to trade in and drive away the same day
We handle the paperwork, pay off your old loan, and help you drive away in a car you love — without financial stress.
Final Thoughts
You don’t have to wait until your car is paid off to trade it in. With the right knowledge and a trusted partner like Drive with Babar, you can make a smooth, smart transition to your next vehicle — even if you’re still paying off your old one.
Let’s Get Started
📝 Apply for Pre-Approval Now
💬 Speak to a trade-in specialist today
🚗 Find out your current car’s value – fast and free
Drive Smarter. Trade Confidently. Drive with Babar.
