 TITLE: How to Trade In a Car CONTENT: What Is Negative Equity?\n------------------------\nTrading in a car is a convenient way to save money on your next vehicle, but in some cases, it may not be worth it.\nNegative equity is a term used to describe a situation where you owe more on your current auto loan than the car's value. According to Edmunds, 44% of new car sales with a trade-in involved negative equity in April 2020.\nSo what happens if you have negative equity? In most cases, the dealer will offer to pay the full balance of what you owe and add the deficiency to your new auto loan. This is the most convenient option, but it means you'll have a higher monthly payment on your new auto loan than if you had positive equity.\nSelling your car to a private party could be a good way to avoid this, especially if the difference in sales price is enough to wipe out the negative equity. But if it's not, you'll need to pay the deficiency in a lump sum, which may not be possible if you don't have the required cash.\nAs with every other part of the trade-in process, it's crucial that you consider all of your options if you have negative equity because there's no right answer for everyone. END