Step 1: Find out exactly what you owe

If you still have a loan on your car, the CFPB says to start by getting the "payoff amount" from your lender. It is the amount remaining on your existing loan, and it might be different from the outstanding balance on your statement or coupon book because of the way interest is calculated, any outstanding late fees or charges, or another reason.

The CFPB also notes that in some cases there may be a prepayment penalty for paying off your loan early, so check your loan terms.

From the CFPB's Should I trade in my car if it's not paid off?, read October 28, 2026.

Step 2: Research what your car is worth

The CFPB suggests these ways to research your car's potential trade-in value or actual cash value before you visit a dealer:

• Estimated trade-in values from Consumer Reports, Edmunds, Kelley Blue Book and NADA Guides.
• Online classified ads for similar vehicles in your area.
• Estimates from more than one dealership. Like shopping for an auto loan, you can get trade-in estimates from multiple dealerships and negotiate the value.
• Selling it yourself. Compare what dealers would give you with selling the car to another person directly and putting that money toward a down payment.

The CFPB notes that the used vehicle market fluctuates, which can affect your trade-in value.

From the CFPB's Should I trade in my car if it's not paid off? and What things can I negotiate when shopping for a car or auto loan?, read October 28, 2026.

Step 3: Know whether you have equity or negative equity

Compare your payoff amount with your trade-in value. The CFPB lays out the two cases:

From the CFPB's Should I trade in my car if it's not paid off? and What things can I negotiate when shopping for a car or auto loan?, read October 28, 2026.

With these numbers in hand, the CFPB says you can better decide whether to pay off your existing loan now, wait until it is paid off, or include what you still owe in the new loan. Its guide on negotiating adds that a longer loan puts you at risk of negative equity for a longer period, which matters if you try to trade in the car before it is paid off.

Step 4: Negotiate the trade-in as its own number

Your trade-in value is negotiable, and the CFPB suggests you may want to negotiate some details separately. For example, a dealer may quote you the value of your trade-in while a bank or credit union offers a better interest rate and loan terms.

• Get the numbers early and write them down. Ask any dealer or lender for the trade-in value, interest rate, loan term and estimated monthly payment, and record the key details so you can compare.
• Watch the total, not only the payment. If an old loan balance is rolled in, it adds costs to your new loan.
• Check promises about negative equity. If a dealer promises to pay off your negative equity, make sure it is not included in your new financing or final loan contract.
• Read before you sign. Read the contract carefully, and do not sign anything until you understand and are comfortable with the terms.

From the CFPB's What things can I negotiate when shopping for a car or auto loan? and Should I trade in my car if it's not paid off?, read October 28, 2026.

How the Illinois trade-in tax credit works

When you buy from an Illinois dealer, the dealer reports the sale to the Illinois Department of Revenue on Form ST-556, and a qualified trade-in is subtracted from the selling price before the sales tax is figured. A qualified trade-in is an item that you give the dealer to reduce the selling price, that the dealer is allowed to subtract from the selling price, and that the dealer is in the business of selling. A car traded in on a car at a car dealer fits.

For a few years there was a cap: on sales made from January 1, 2020, through December 31, 2021, the trade-in credit for a first division motor vehicle was limited. The Department's instructions say that limit no longer applies to sales made on or after January 1, 2022.

Both the dealer and every purchaser sign the ST-556. When a trade-in is claimed, the signatures also declare that the title of the traded-in vehicle has been properly assigned and surrendered to the dealer, so bring your title or be ready to work with your lender on it.

From the Illinois Department of Revenue's Form ST-556 instructions (R-12/24), read October 28, 2026. Tax rules can change; this is general information, not tax advice.

Step 5: After the trade, confirm your old loan is paid off

If you trade in your car and roll your existing loan balance into the new loan, the CFPB suggests these steps to make sure the original loan has been completely paid off and you do not have any outstanding payments:

1. Find out which department at your existing lender can confirm the old loan has been paid off once you have finalized the new loan.
2. Wait one week, then contact the old lender to check that the previous loan has been paid off.
3. If it has not been paid off, contact your new lender. If, after reasonable efforts, it still has not been paid off, you can submit a complaint to the Federal Trade Commission or the CFPB, or contact your state attorney general.

From the CFPB's Should I trade in my car if it's not paid off?, read October 28, 2026.

Trading in your car at Elgin Auto Sales

Start with our online trade-in appraisal form, then bring your car to see us. Come with your payoff information if you still have a loan, and your title if you own the car outright. If you are financing the next one, you can also start our finance application before you visit.

Elgin Auto Sales & Service Center is at 1200 E. Chicago St. in Elgin. Sales is open Monday to Friday 9 a.m. to 7 p.m. and Saturday 9 a.m. to 6 p.m.; our service department, which works on all makes, is open Monday to Friday 8 a.m. to 5 p.m. and Saturday 8 a.m. to 4 p.m. Both are closed Sunday. Get directions.

Shop used inventory or contact us with questions.