If you have a trade-in you want to use as a down payment on your next car, there are several pieces of paperwork you can bring with you. There’s paperwork you need, such as the title, and paperwork that's optional, such as your vehicle's estimated resale value.

Documents You Need to Trade In Your Car

What Paperwork Do I Need to Trade In My Car?Dealers are very familiar with the trade in process and the documents that are needed to do this. When it comes to the paperwork you’re required to bring with you, you should have the following two things:

  1. Title – You can’t trade in a car without a title. If there's another lender that's the secured party on the title, you need to have a payoff letter from this lender. Include their contact information and the account number, too.
  2. Registration – If you plan on transferring your license plate to the new vehicle, make sure you have your current registration with you.

When you get to the dealership, the dealer is going to appraise your trade-in and tell you its actual cash value. They may use Black Book, Kelley Blue Book, NADAguides and/or auction prices to determine its value – but this depends on the dealership.

Before you start the trade in process, you can visit many of these valuation sites and get an estimate of your car’s actual cash value. It may not be the same as the dealer appraisal, but having this information ready and in hand can help you negotiate.

Another optional bit of paperwork you can bring in when trading in your vehicle is service records. If you've taken good care of your car, this can give you some more leverage when it comes to negotiating.

What if I Owe on My Trade-In?

Ideally, you should have equity in your trade-in when you’re ready to buy your next vehicle. This isn’t always the case, however, and you may find yourself owing more than the car’s worth.

This is called having negative equity, or being upside down, in your auto loan. Negative equity is very common, but what do you do if you have a trade-in and you owe on it?

Some lenders allow you to roll over negative equity into your new loan, but this isn’t typically recommended. The reason why is because once you roll over the negative equity, you’re responsible for paying on two loans at the same time – it doesn't just go away.

If the lender doesn’t allow you to roll over the negative equity, but you’re determined to trade in your vehicle, your next best bet is to pay the difference in cash yourself. If you don’t have the cash available to pay off the loan, you need to either wait until you have the cash or until you have equity in your trade-in.

The Bottom Line

It’s important to be prepared when the time comes to trade in a car. Have all the proper documents ready before you walk into a dealership, and bring in any additional paperwork you may need for the negotiating process.

If you have a trade-in and you’re looking to finance another vehicle, but worry your bad credit may hold you back, have no fear. At Auto Credit Express, we want to help you find a local dealer with the lending resources you need.

We're teamed up with a nationwide network of dealerships that understand and know how to work with challenging credit situations. If you have less than perfect credit and need an auto loan, get started by completing our free and easy car loan request form today.