Short Answer: All of the new and used car dealerships we contacted said they would accept a negative-equity vehicle as part of a trade-in deal — but acceptance will depend on your credit and the value of the vehicle. Keep in mind, trading in a negative-equity vehicle can greatly increase your monthly payments and the total amount you’ll pay for another vehicle. For more details, see below.
Car Dealerships That Accept Negative Equity
We contacted car dealerships across the country and found that both new and used car dealerships will accept a negative-equity vehicle as part of a trade-in deal. We were told that in order to approve such a deal, the borrower’s credit and the vehicle’s value will need to be evaluated. The determine the value of the car, you’ll need to bring the car in and provide the VIN number and documentation showing your loan payoff amount.
New cars depreciate quickly, meaning they lose substantial value over a short period of time. If you recently financed the purchase of a new car, you likely have negative equity — or owe more than the car is worth. This can be a concern if you want to trade the car in as part of a new lease or purchase.
The List of Car Dealerships That Accept Negative-Equity Vehicles
Representatives for dealerships that sell the following car brands told us that they would accept a negative-equity vehicle. If your local car dealership specializes in one of these brands, it should be willing to consider your negative-equity trade-in, depending on your credit and the value of the vehicle.
Additionally, here are the used car dealership brands that accept negative-equity vehicles:
- Berkshire Hathaway Automotive
- Penske Automotive Group
- Sonic Automotive Inc.
None of the dealerships we spoke to would provide a negative-equity range or limit. But we were told that if you have excellent credit, the dealership will likely extend much more of your equity. If your credit is less than ideal, the dealership may require you to pay for the shortfall in cash.
Increased Auto Loan Balance
Keep in mind, your negative equity doesn’t go away when you trade in your vehicle. The amount gets added to the loan balance of your newly financed vehicle. This will increase your total amount owed and the monthly interest you pay.
The Federal Trade Commission has highlighted the fact that dealers may make claims like: “We’ll pay off your loan no matter how much you owe,” when in fact, you’ll still end up paying the amount owed even if the dealership accepts your vehicle as part of a trade-in deal.
To find out how much you’ll likely be paying, see our article on auto loan credit tiers.