Trading in a Car with Positive Equity

We explore how you could make the most of your car's positive equity.

If you currently have a car on finance, did you know that you can get out of your existing car finance deal before the end of your current agreement? There are various options available to you, including part-exchanging and voluntary termination.

If you knew that getting out of your deal was possible but weren't sure how to, Car Credible has all the answers you need to know to ensure you get the best deal possible and into the car of your dreams.

The first thing you'll need to do is find out how much your current car is worth. If your vehicle is worth more than the remaining amount you owe the finance company, you are in a positive equity position.

Do you have a car on finance and would like to reduce your monthly repayments? Sign up with Car Credible today; we could help you save money on your deal.

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If your car is worth less than what you owe the finance company, you are in a negative equity position. That doesn't mean no options are available, it just means you may have to pay some money out of your pocket.

Once you have discovered what your car is worth and your subsequent equity position, you can start looking for a new vehicle and work out your budget. But before that, we need your car's value to discover your options.

Find out what your car is worth

If you're looking to trade in your car for something new, you first need to find out what your vehicle is currently worth to identify if it's in a positive equity position. 

It's simple to find this information, just sign up to Car Credible via our Deal Checker. Submit your car's reg, mileage and finance details before creating your account.

Once you've done that, we will create your personalised dashboard where you can track your car finance deal without the need to call your lender or go into your dealer's showroom.

We will show you your car's equity position, early settlement figure, outstanding balance, how much interest you should expect to pay throughout your deal, and much more.

It's a great free tool that helps you understand your car finance detail in much greater detail than you've ever had access to. Not only that, we notify you when you're in the best position to get into a new car or finance deal, or you can get your free, no-obligation car finance quote at any time to see your latest offers.

We can help you with all aspects of your finance deal, find out what your car is worth, and that its equity position is only the beginning. Sign up today for everything you need with your car finance deal.

Trading in a car with positive equity

Once you've signed up with Car Credible, you will discover your car's value and equity position. From here, you can get a clearer idea of your options and how you may wish to proceed.

If your car is worth more than what you still owe the lender, you're in a positive equity position. For example, if your vehicle is worth £10,000 and you still owe the lender £8,000, you have £2,000 of positive equity.

trade-in-car-with-positive equity

That means that you could part-exchange your existing car and get into a new vehicle, taking the £2,000 equity with you and using it as your deposit which will help to reduce the overall loan and the monthly payments you'd be required to make.

If you have any savings and wish to add to the equity from your existing car, then you can do so. It would help further reduce your monthly repayments.

Trading in a car with negative equity

If your car is worth less than what you still owe the lender, you're in a negative equity position. For example, your vehicle is worth £8,000, but you still owe the lender £10,000, and you have £2,000 of negative equity to make up.

As you continue to make your monthly repayments and your car's depreciation slows down, you will eventually get into a positive position. That could take several more months, depending on how much you pay each month and the amount of negative equity you have.

However, if you are in negative equity and are desperate to trade your car in and get something new, options are available to you. 

You can make up the difference between your car's value and the amount you owe the lender. In our previous example, that would mean making up £2,000 out of your pocket to get into a new car and finance deal.

Your new lender could absorb your negative equity into your new repayment plan. However, that could mean your monthly repayments are much higher, and it will take longer to get into a positive equity position.

Can you trade in a leased car?

If you are on a leasing car finance plan, it could still be possible to trade your car in for something new. Start by contacting the leasing company to see what the car's buyout value is.

That's the amount you would have to pay if you were to buy the car outright before the lease ends. There may also be an early termination fee included, so ensure you double-check before committing to anything.

Once you know your buyout value, contact the dealer where you wish to buy your new car, and they will liaise directly with your leasing company. 

You may struggle to get the full amount of your trade-in because of early termination fees. Therefore, it could make more sense to wait until your lease ends so you can exercise your purchase option.

When your lease ends, you don't have to buy the car and can simply hand the vehicle back and walk away. That could be the better option, as it enables you to start a new car finance deal from scratch. 

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What are my next steps?

Once you have signed up to Car Credible and identified your equity position - positive or negative - you can start to work out what you would like to do next and the potential new car you'd want to get into.

If you're in a positive position and want to act now, you can click on the 'get my quote' button within your dashboard, fill out our form and discover your car finance offers.

It's free, and there is no obligation to take out new finance if you don't like the offers you get presented. There will be no impact on your credit score either unless you physically apply for one of the finance offers you like.

If you're in a negative equity position and want to wait until you're positive, you can track your deal in advance and budget, so you will know at what point exactly you are in a positive position.

If you can't wait to get into a positive position, there could still be options available, so you can hit the 'get my quote' button, fill out the form and see if any lenders can offer you anything.

Once you apply for new finance, whether in a positive or negative position, you will be allocated a dedicated account manager from one of our finance partners to help answer any questions.


How long does it take for your car to get into positive equity?

A car's value depreciates the moment that you drive it off the dealer's forecourt. It typically depreciates rapidly for two to three years then slows down. Therefore, it can often take at least two and a half years for your car to get into a positive equity position. The more deposit you initially put down and the higher the monthly repayments you make can help you get into a positive position quicker.

When trading in, will I need to put my own money in for a deposit?

When going from one finance deal to another, if you have positive equity in your existing vehicle, you may not want or need to put any more down. It's advised that you always put a deposit down to help reduce your monthly repayments. Some lenders may insist on a deposit before approving your application.