Does anybody know how to get around the negative equity issue when buying a car?

Question

I also have a trade in if that helps

Answer 1

Well, the trade doesnt help at all if youre upside down. Theres no way to dodge negative equity unless you remove it from the equation. Then youre responsible for selling your car on the street (which you can get more money from versus trading in), and paying off the balance out of pocket, but most people dont want to do that. My best advice is to lease a car, and that absorbs the negative equity somewhat. The way it works is that negative equity goes to the cap cost that you finance up front, and you bascially only finance the portion of the car you use. The residual is what's left over at the end of the lease which you either pay or re-finance, but dont do that. Walk away clean and lease another car. Think of it this way, you finance a car for 60 or 72 months and trade it in after 36, what did you do? You still have to pay the balance and thats where the negative comes from. Lease a car or the same amount of time (36 or even 48 months) and you're in much better shape. People may tell you that leasing is useless because you never own the car, but they dont see the big picture. A car depreciates every day, why would you want to be attached to something you constantly lose money on? You never recoup the investment (unless it's a Lambo). Even with mileage penalties (if you drive enough to incur one), you'll be better off with that than trying to roll 10 grand in neagtive into a new purchase. Dont like the lease idea? Buy certified pre-owned. The cars have already taken an initial depreciation, it doesnt hurt as bad at trade in, and mileage isnt a factor. And always negotiate! Hope that helps.

Answer 2

Negative equity is when you owe more on your loan than your car is worth.

The problem with negative equity is that if you want a new car, your dealer will simply add the difference into your new loan or lease, and you'll be instantly upside down again in your new car. Further, if your car is stolen or totaled in an accident, your insurance only pays what the car is worth, not what you still owe. Big problem.

If you're buying a new car and want to prevent negative equity (being "upside down"), you can do some or all of the following:

- Make at least a 20% down payment
- Don't get a long-term loan -- no more than 48 months.
- Have a trade-in that is worth at least 20% of the new car cost -- or combine your trade-in value with a down payment to get to 20%.
- Have a good credit score so that you don't have to pay higher than average interest rate -- about 7%.
- Don't roll in negative equity from another loan.

Good luck.

Answer 3

Put down a large enough down payment. I know that sounds like a nasty answer, but what else could you do to get out of a negative equity situation?

I assume that you are upside down on the trade in, and they are adding the amount to the purchase price of the new car.

Is there any way you can keep the car you have until you can get a larger down payment or pay it off more? That would be the best way to get money ahead. good luck.

Answer 4

When we went in about a year ago to trade, we still owed on the last car, it is a good car , in good shape, a 98 Olds, So, I told them that I was not acepting their trade and that I was putting the rest of the payment on the bill and taking the Olds home. I would have had to pay for it anyway, might as well have a spare, it 56 miles one way to work . And no public transportation.

Answer 5

There are some dealerships that comprehend that a undeniable phase of the inhabitants is credit challenged and make the hassle to entice enterprise by using offering subprime loans to those human beings. different dealerships in all hazard do no longer choose the difficulty, extraordinarily a intense-end broking like Lexus. basically approximately anybody with awful credit can hit upon a private loan in the event that they seem for one. in spite of the shown fact that, they are going to get that mortgage at a plenty greater pastime fee and pay plenty extra for the automobile contained in the long-term.

Answer 6

there really is no way to avoid it,even if you pay a large sum of money down ,that's still money you have tied up in it the car,and paying cash for a car will help to avoid this,but either way you do look at it ,buying a new one ,you still loose money on it,there's no way around it,the only way i have ever came out on a deal like that was to pay cash for one,and i still took a beating on the price of it,pay cash though that helps bring this down,good luck on it.

Answer 7

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Answer 8

Yes, pay cash if possible, or at the very least a bigger down to avoid being upside down with the financing.