How to Get Out of an Upside Down Car Loan?

How to Get Out of an Upside Down Car Loan?
If you’re “upside down” or “underwater” on your car loan, it means you owe more on the loan than the car is worth. This situation is also called having “negative equity” in the car. Several years after purchasing a car, this can be the case because of how fast a new car depreciates when you drive it off the lot.
What can you do if you need to sell a financed car, but you’re upside down on the car loan?
First, find out if you really are upside down on a loan. Call your lender and determine the ten-day payoff amount (it must be recalculated after ten days because of interest accrual). Then assess your car’s market value by checking Kelley Blue Book or Edmunds (suitable for dealer trade in value), but also see what similar cars are selling for in your area.
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In a down economy, you may find your car is unaffordable and want to get out of it, but you’re upside down on a loan.
Here are your options:
1. Sell or Trade at Dealership:
If you sell outright to a dealership (for trade in value), you’ll have to make up the difference between the car’s value and loan payoff amount. You could trade it in toward a more affordable car, in which case the negative equity will be rolled into the financing of the car you buy, though this may or may not be a good idea, in the long run, depending on the terms of the new loan.
2. Refinance Existing Loan:
This is not common on car loans, but if interest rates are lower or you can get a longer-term loan, you might be able to get a more down monthly payment that is more affordable.
3. Private Sale:
Conventional wisdom says you’ll get more by selling your car privately on your own. This is true in the big picture but doesn’t guarantee it’ll be the case for you. Either way, if the lender doesn’t allow you to transfer the loan to the buyer, you’ll still have to make up the difference between the loan payoff and what the buyer gives you for the car.
If you’re upside-down on your car loan and want to get out, Driveo can help! Our offers are competitive, and we handle all the details for you, including the payoff of your lender. We’ll also be sure to cancel any add-ons you had, such as GAP insurance or service contracts to maximize the resale value. Get a Driveo quote today!
Driveo - Sell Your Car. Easy, Fast, and Hassle-Free!
Website: www.driveo.com/
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