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9 Common Questions About Trading A Car In!

9 Common Questions About Trading A Car In!

If you currently own a car and are considering visiting the dealership to discuss a trade-in, you probably already have a few questions in mind! I have been through this process many times, so let me see if I can help answer some of the most common questions you might have. 

Trading in a car is usually pretty simple, but there are some potential pitfalls to try and avoid during the process.

Can You Trade In A Car With Expired Registration?

Trading in a car with an expired registration is nothing groundbreaking. It happens all the time!

But, doing so does tend to knock down the value of your vehicle in the dealership’s eyes. Therefore, in some cases, it may make more sense to update your vehicle’s registration before your trade-in negotiations. 

Time is money in the dealership’s eyes, so saving them time will equal more money in your pocket!

The rules related to car sales vary by state. But, keep in mind that driving a car with an expired registration is usually illegal. That means doing so can result in tickets from the police and sometimes even your arrest if you get caught. 

So you may want to consider hiring a tow truck to legally transport your vehicle to the dealer.

If you think you can roll the dice and risk-taking a short drive to the dealer, be aware that many police departments have adopted the use of laser scanners to read your registration information instantly while you’re driving. 

That might mean that you get a ticket in the mail from an automated enforcement system down the road. 

Even if you do get to the dealer without incident, they will likely  have to incur costs related to re-registering the car, so they will not give you anywhere near top-dollar valuation. 

You should check your state’s motor vehicle laws carefully to make sure you understand all of the requirements and the options you may have. It can’t hurt to do some research or to contact your state’s department of motor vehicles. 

Some states will end up charging you a fine when you transfer ownership of a vehicle with a lapsed registration. 

Suppose your car is not running or driveable. In that case, there is often an opportunity to register your vehicle with a non-operational title so that you don’t run afoul of registration requirements. 

Since each state’s rules are different, you need to do some research. Even though your dealer can be a helpful resource in this sort of situation, don’t take their word for gospel. 

You don’t want to poison your new car purchase by making a big mistake with your trade-in. Again, do some research and ask questions!

Can You Trade In A Car With A Loan On It?

Not only can you trade in a car with a loan still on it, but it is also a common practice to do so. Many people end up with a car that they want to trade in while they still have payments to make on the loan they used to purchase it. 

I doubt that you will have any difficulty trading in a car with payments left on the loan at a car dealership. Let’s think about why it isn’t a big deal to do so. 

Think of the trade-in value of your car as a credit towards a new loan.

If you owe nothing on the old loan, the total trade-in value is available to be applied to the purchase of your new vehicle. But, if you still owe money on the car you’re trading in, you are still responsible for paying that outstanding portion of the loan. 

So, if the sum of the remaining payments on your loan is less than the trade-in value of your car, you end up with some money leftover. That can be considered as cash in your hand, ready for you to apply to your next purchase. 

If the sum of the remaining payments on your loan is less than the agreed-upon trade-in value, you still owe the difference. Dealerships will likely tell you that you can rollover the unpaid portion of your old loan as part of a new one for a new car. 

When rolling over a loan, you are essentially combining the remaining debt on your old loan with the total amount you are going to owe for your new car loan. Then you spread the total amount of the term of the loan. The payments consolidate into one monthly amount. 

You should always be wary of over-stretching your budget when rolling over a car loan. You are, in effect, going to be paying for two cars at the same time. So, you should be careful to understand the terms and not over-extend yourself. 

You want to avoid getting into a situation where you have negative equity in a loan if possible. Your dealer can help walk you through the steps, but remember that they are a business, and their primary motivation is to make a sale, not to protect your finances. 

Make sure that you are looking at a new car loan that fits your budget and that you are getting the maximum trade-in value for your old car. 

Can You Trade In A Car With Negative Equity?

Yes, and it is relatively common to do so!

Anytime you owe more than your vehicle is worth, you have negative equity. When you trade it in, it is quite common to have your old debt rolled into the financing agreement on your new purchase. 

You’re basically going to be paying off your old loan as part of a new one. But, be careful. You can easily end up with an arrangement that not only increases your costs but makes it harder to ever achieve positive equity. This is the last thing anyone wants.

To mitigate the risks of carrying negative equity, consider that there are a few things you can do.

First, make sure you’re not just taking your dealer’s word for it when it comes to the value of your trade-in. There are quite a few reputable third-party sources to see the value of your car. 

Compare that to the dealer’s offer to references online and make sure they’re in the same ballpark. 

This will also help you really see how much negative equity you have. If you still owe $14,000 on your loan, and your car is only worth $10,000, the remaining $4,000 is your total negative equity. 

You should also at least investigate the price you could get for your vehicle in a private sale.

That number is usually a bit higher than what a dealer is willing to offer as a trade-in value. But, it usually means you will have a bit more work to do when it comes to advertising your vehicle and completing the required paperwork. 

Now, armed with the facts, you can push for a better trade-in value from your dealer. They probably won’t give you the full market value, but you can push back a bit on their number if you know the market price. 

You can always consider buying a cheaper car to account for the negative equity you’re holding on your own vehicle. Or, if your current vehicle is serving you well, perhaps hold on to it until you’re all the way out from under the loan. 

Be wary of extending the new loan’s term because that is likely to put you right back in the same negative equity situation at the end of your new loan. 

Everyone’s circumstances are different, so it’s important that you take stock of your unique situation and see what’s available. If your vehicle is holding up fine, then waiting a little longer might be a great idea. 

However, if you are beginning to struggle to get to work, then other sacrifices might need to be made to get that new car. 

Only you know your exact finances and what you are willing to sacrifice for. If in doubt, just create an excel sheet to better compare prices and potential budget scenarios.

Can You Trade-in A Car With Expired Tags?

To me, expired tags are pretty much synonymous with an expired registration. If your plates are expired, it’s likely that your vehicle’s registration has also lapsed. But, just like with an expired registration, you can absolutely trade in a car with expired tags. 

I do recommend making sure that you do some research to make sure that you comply with the laws of the state where you live and where your car is registered.

There are often very specific rules that govern how to surrender your plates, what happens if they or your registration lapse, and the requirements for maintaining insurance on your vehicle. 

To make sure you avoid any legal entanglements or fines, it’s always best to check the laws where you live. 

If you don’t really know what to do, consider calling your car dealer. They have probably dealt with similar issues and might be able to offer some advice. They may even be motivated to help so that they can sell you a new car and put your current vehicle into their inventory. 

Can You Trade In A Car With A Salvage Title?

In short, you can absolutely trade in a car with a salvage title. But it might be pretty complicated to do so. Dealers tend to avoid salvage titles as trade-ins because their value has been compromised.

Even if they trust you or have worked with you a lot in the past, it is almost impossible for them to know what the risk of future repairs might be for a vehicle with a salvage title. 

Since, at some point, the value of the vehicle was less than the estimated costs to repair it (hence the salvage title), it is nearly impossible to determine a fair market valuation.

The dealer does not want to end up holding the bag if the car is unfixable or unsellable down the road. 

They are also probably afraid that no one will want to buy it from them because insurance companies are unlikely to pay out much money in the event of an accident. The value has become compromised. 

You will probably be better off trying to do a private sale instead of trading in a vehicle with a salvage title. 

But, it can’t hurt to approach your dealer and discuss the options. Sometimes, they might have a mechanic or staff person who wants to try and fix a salvage car they find desirable. 

Can You Trade In A Car With A Cracked Windshield?

Yes, you can trade in a car with a cracked windshield. However, there is an increased likelihood you will get a low-ball offer as the dealership may assume that the vehicle has been poorly cared for and will require additional maintenance to resell.

Most car buyers, whether private individuals or purchasing agents at an automotive dealer, will view a cracked windshield as a signal that the car is in rough shape. 

They are saying to themselves, ‘If they didn’t fix the crack in the windshield, what else have they let go?’  Fairly or unfairly, they will likely think that you haven’t done much to maintain the car. 

So you should expect that the trade-in value will take a hit. Additionally, some states require a safety inspection. 

If the crack in the windshield makes the vehicle fail the inspection, the dealer will have to fix it out of their own pocket, so cutting into the trade-in value is good business for them. 

If it’s just a small crack, it may be possible to repair it. But, if it’s not repairable, you should also keep in mind that replacing a windshield is often covered by your insurance policy, often at little cost to you aside from a deductible.

Even if it is not covered by insurance or you do have an out-of-pocket expense, you can probably get the windshield replaced by a reputable windshield service company fairly inexpensively. 

Some of them even come to you to do the work, making it very convenient. Your dealer may even be able to point you toward a local windshield replacement company. 

Can You Trade In A Car With Mechanical Issues?

Trading in a car will most often require an inspection. If that inspection reveals mechanical issues, the dealer’s offer will plummet, especially if you tried to hide the issues from them. 

You can trade in a vehicle with mechanical problems, and the old axiom of ‘honesty is the best policy will be helpful in getting the best value for your trade-in. 

If you suspect your car has an issue, be upfront about it. Pretending it doesn’t exist isn’t likely to do you any favors. 

Dealers will scrutinize your trade-in car visually via vehicle history records searches through companies like Carfax and by using a scan tool to read out any error codes stored on your vehicle’s onboard computer. 

Now, there are tricks you can do to hide mechanical issues. For instance, You can unplug the battery for a period of time and likely remove any fault codes. Or, you can clean up leaking oil from a bad gasket and try to hide the evidence of other mechanical defects. 

But, if your tricks are discovered during a trade-in inspection, the dealer might not even make you an offer at all. How could they have any faith that you’re not hiding something else? This is a risk to do and should only be done with minor issues that do not compromise the integrity of the vehicle.

Ethically speaking – it makes sense to simply fix things that are broken where it makes sense and avoid trying to hide things.

Can You Trade In A Car With Damage?

Cars with damage are traded every day. After a few years of use, most cars end up with some scratches, marring, or little dents. It happens no one has perfect luck with caring for their car and keeping it in pristine condition. When it comes time to trade it in, minor incidental issues won’t affect the value too much. 

But, incidental damage stops with things like door dings from cars parking too closely, bumper scuffs, and road-rash on the wheels. If you have a big dent in the fender, a rusty quarter panel, or broken tail lights from a crash, your trade-in value is going to drop like a stone. 

Take advantage of touch-up paint, paint-less dent repair, and eBay. Repair minor scratches, try and pop out those little dents, or have a pro do it for you for a nominal fee. 

And, get on the internet and see if you can find a cheap replacement part to replace the shattered tail light or the cracked bumper. 

You might be surprised how inexpensively you can purchase quality used and new parts online. Sometimes, you can even order body panels that are already primed or painted to match your vehicle. 

Making sure your car looks presentable can make all the difference when you reach out to trade it in. The last thing you want is to lose out on a great deal on a new vehicle because you didn’t get quite as much as you expected for your current one.

Can You Trade In A Car With A Check Engine Light On?

Approaching a dealer about a trade while your vehicle is showing a check engine light (CEL) is asking to get a low-ball offer. 

Dealers will look at a CEL and assume the worst. Even if it’s just indicating a faulty oxygen sensor, they will likely assume that all the oxygen sensors need to be replaced. 

And, where there is one repair gremlin, there is almost always another! So their calculations will err on the side of financial caution. They don’t want to get caught holding the bag if that CEL turns out to be the tip of the iceberg. 

So, it’s often a good idea to have the CEL checked and perform the required repair prior to asking about a trade-in. Instead of showing up with a mysterious CEL, you show up with a service record that includes a timely repair. This puts you and your car in a much better light. 

And, if you try the old unplug the battery trick to clear the code and the code shows up on their scan anyway, they are going to offer you a pittance for your car. A little bit of proactive maintenance will likely help boost their offer a bit. 

You are trying to get the most bang for your buck when you trade in your vehicle. It was an investment for just this reason, so it is imperative that you take the time to make it look in tip-top shape. 

You are trying to sell in essentially, so why would you offer a product that isn’t up to snuff and limit your own profits?

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Zach Reed

Hi, I'm the founder of! Having owned a wide variety of vehicles in my life, I was astounded at how hard it can be to find answers to common automotive questions. Rather than sit idly, I decided to create this website to help others!