Trading Your Car Upside Down
An upside down or underwater auto loan is when your loan balance is worth more than the value of your car.
Trading your car upside down. Unfortunately for most of us a car is. This is a bad situation for a car as they usually depreciate with age unlike real estate. If you do want to sell your car back to the dealership you might consider trading in your upside down car for a cheaper car.
Yup it s a huge bummer. If you were to trade in that car on the new car you would still have to give the. You are upside down on your car loan when you owe more on the loan than your car is currently worth.
Being upside down means you owe more on your car loan that the car is worth. If your trade in value is less than the balance of your current car loan you are upside down by that amount. Being underwater on your car loan can be risky especially since standard insurance policies only cover up to the value of your car.
If your loan is upside down it s much harder to catch up on your loan payments as your car s. If your car is worth 17 000 and your loan payoff amount is 15 000 you have 2 000 in equity. Doing so can help eliminate your negative equity.
If you re upside down on your car loan it s a good idea to delay your trade in if you can unless you are comfortable paying off your negative equity upfront. For example if your vehicle is worth 11 000 and your car loan is 15 000 you have 4 000 in negative equity. Going upside down or underwater on your auto loan happens when the market value of your vehicle is less than the amount you owe.
Having negative equity or being upside down in a vehicle means that your loan balance exceeds the current value of your car. Trading in a financed car with negative equity. A lot of vehicle owners have negative equity but they may not realize that this is a problem until they try to trade the car in for a different one.
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