Upside Down Car Loans

If your car is worth less than what you owe on it, your car loan is considered to be upside down.  Don’t feel alone, because many people are in the same situation.  Don’t worry though, there are options for you.

Keep the car –  We recommend keeping the car for the full term of your loan.  When this is done, there is not an upside down situation.

We know that isn’t always an option.  If it isn’t for you, consider the following.

Refinance – If you are having a hard time keeping up with payments, and your credit is OK, you should try to refinance to lower your payments.

Trade it In – While you aren’t really solving your problem, if your situation requires that you have a different car, you could trade it in on a different car, and transfer the balance of the loan to the new vehicle. To find a dealer that could help you accomplish this, you can complete the online auto financing application.

Pay it Off – If it’s possible, try to find the money to pay the difference so you will be free and clear of it.

Avoid this problem in the future

If you don’t want to be in this situation again, there are a few things you can do to make sure it doesn’t happen.

  • Don’t buy a car if you can’t afford to pay 20% down.
  • Don’t finance for more than 5 years.
  • Don’t commit more than 15-20% of your monthly income to a car payment.

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