What to do if you want to sell your car but you owe more than the vehicle is worth
Last Updated: Wed June 14, 2023
Purchasing a vehicle is an exciting milestone, but sometimes unforeseen circumstances can lead to negative equity. Negative equity occurs when you owe more on your vehicle loan than the vehicle is worth. This can happen for a number of reasons, such as depreciation, an accident, or an extended period of unemployment.
There are a number of steps you can take to manage negative equity. Here are a few tips:
Understand your situation
The first step is to understand the extent of your negative equity. This means knowing your loan balance, the current market value of your vehicle, and the terms of your loan agreement.
Increase your loan repayments
One way to reduce negative equity is to increase your loan repayments. This can be done by making extra payments each month or by paying off the loan early.
Refinance your loan
If you have good credit, you may be able to refinance your loan at a lower interest rate. This can help you save money on interest and reduce your monthly payments.
Make extra payments
If you can afford it, making extra payments on your loan can help you reduce negative equity more quickly.
Consider a trade-in
If you're looking to buy a new car, you may be able to trade in your current vehicle. This can help you reduce the amount you'll need to finance, but it's important to remember that the trade-in value of your vehicle will be less than the amount you owe on the loan.
Focus on long-term ownership
If you can afford to keep your current vehicle for a longer period of time, you can gradually reduce negative equity by making regular payments.
Seek professional advice
If you're struggling to manage negative equity, you may want to seek professional advice from a financial advisor or credit counselor. They can help you assess your situation and develop a plan to reduce negative equity.