Occasionally, hard times hit, and we have no choice but to take on an auto loan before we are ready. And, in some cases, while still paying on an existing car loan.

Here at Auto Credit Express, we know that the short answer is “yes”. But be careful if you still owe money on it and are “upside down”…

If you want to trade in a vehicle with negative equity, you will have to deal with the difference between the car’s current value and what you still owe on the loan.

Can you trade in a vehicle that’s not paid off? It really depends on the new lender and your equity situation.

Having negative equity in a car loan, or being “upside down” or “underwater,” is common. But if you’re looking for a new car and want to trade your old vehicle in, what options do you have and what should you do about it?

The statement that some car dealerships make that promise to "pay off your trade" may not mean what you think it does if you owe more on your current loan than your vehicle is worth.

Remember, if you still owe on a vehicle, the lender owns the car and, in most states, holds the title. Many states make it illegal to sell a vehicle without a title. If you’ve lost the title, getting a replacement is a relatively simple process. But if you don’t have a title because you didn’t pay off your loan, you’ve just sold a stolen car – which is certainly illegal.

When it comes time to trade in your car, it pays to be prepared. Deciding to trade in your vehicle to a car dealer instead of selling it privately comes with some benefits and less stress.

It's common to trade in a vehicle before it's paid off, but the situation gets tricky if the car is worth less than what you owe on it.

According to a recent report, almost one-third of cars consumers traded in on new car purchases had negative equity in 2017.