A recent survey DealerRater conducted for Automotive News looked at the different ways car buyers deal with negative equity on their trade-ins. It found that the majority of consumers deal with this all-too-common situation in the worst possible way.

More and more consumers are trading in their cars when they still owe money on them. And the amount of money they owe continues to increase. This is a dangerous trend that has consequences which can snowball, especially if you are dealing with less than perfect credit.

Trading in a vehicle with negative equity should be avoided and this situation can be made even worse if you are attempting to finance your next vehicle with a bad credit auto loan.

According to a report from Moody’s Investors Service released last week, negative equity is at an all-time high. Lenders continue to allow consumers to roll over negative equity into their next car loan at trade-in. Moody’s believes this practice has created what they call a “trade-in treadmill,” because it traps consumers in a cycle of never-ending negative equity on each successive car purchase.

Is it possible to trade in your car even if it has not been paid off yet? That depends on several factors, including the lenders the dealership is signed up with, the amount of negative equity, the state of your credit, and more.

It’s good to research your vehicle’s trade-in value before visiting a dealer. This way, you’ll be more confident about getting a good deal on your trade-in when you go to purchase your next car.

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”…

Finding yourself paying for more than the vehicle is even worth? This can cause a lot of problems when you need to replace your car or simply need to improve your credit and vehicle's worth.

Bad credit doesn't necessarily prevent you from being able to trade in a vehicle. However, trading in a vehicle on a bad credit auto loan is typically only possible if it is paid off or you have equity in it.