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Depreciation and other factors can cause drivers to have negative equity on their cars. If you’re upside-down on a car loan and no longer want your vehicle, you may be wondering how to trade-in a car with negative equity. When it comes to selling or trading in a car with negative equity, options are limited — but it can be done! Read on to learn more from Green Light Auto Credit!
When you have negative equity, it means you owe more money on your car loan than what your car is actually worth. This is also known as being “upside-down” on an auto loan. While negative equity isn’t ideal, it’s not uncommon for borrowers to have it and many don’t even notice it while they’re repaying their loans.
How does negative equity happen? Negative equity can often be attributed to depreciation, which begins as soon as you drive your car off a dealer’s lot. It’s also a common result of long-term loans with small down payments or rollover loans. Generally, negative equity only becomes an issue when a borrower no longer wants their vehicle.
There are a lot of reasons why a driver may no longer want their car, such as expensive gas costs, a lack of room, or a change in income. Whatever the reason, negative equity can make trading in your financed vehicle tricky. Here are a couple of options if you have negative equity on a car you no longer want:
If you can’t live with your current vehicle, another option to consider is a trade-in. If you’re wondering how to trade-in a car with negative equity, it’s simpler than you might think. Car dealers can roll over what you owe on the trade-in car into a new auto loan. To do this, you’ll need a payoff statement from your lender, as well as price quotes showing the market value of the car. Before you take this route, consider the following:
Do you have additional questions about how to trade-in a vehicle with negative equity? Contact us at Green Light Auto Credit, serving Florissant and St. Charles. We can also answer other questions related to car buying, such as “Can I sell a car with a lien,” or “What is a branded title?”