Upside Down Auto Financing

If someone has upside down auto financing, it means a buyer’s car is worth less than the total amount she’s paying for it.  Let’s use an example.  Say a car was purchased for $20,000 with $3,000 down, and financed over a 72-month term.  In a few years, the buyer decides she wants to sell the vehicle.  The total loan payoff is $15,000, but the car is really only worth $11,000.  That makes the car’s owner $4,000 upside down in the car loan:  She owes $4,000 more than the car is really worth.  If she decides to sell her car, that $4,000 will end up being added to the price of the next car she buys.  Unfortunately, an upside down car loan isn’t that uncommon.  If you have upside down auto financing, you’re not alone.  Most new-car loans have nearly $4,000 added to them to account for an upside down car loan.  But you can take some steps to better handle what lenders call having negative equity.  To avoid your upside down car loan, try to:
1)  Make extra payments when you can afford it. The quicker your loan is paid off the sooner you get to own your car’s actual value.
2)  Measure your down payment and loan amount when you buy, so the time it takes to pay off your car matches your car’s lifetime value as closely as possible.
3)  Check for financing options that will let you best negotiate the terms of amounts you may still owe on an existing purchase.

How can I get out of an upside down car loan?

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