Being "upside down" on your car payment means that you owe more for the car than what it's worth. For example, perhaps you purchased the car for $10,000 and paid little or no money down. Now, after depreciation, the car is worth just $7,500 but you still owe more than that on the car loan. That makes the car difficult to sell, yet you may just want to get rid of it --- along with the car payment. Unfortunately, your options are limited. Automotive website Edmunds.com reports that you may be better off sticking it out and keeping the car.
Instructions
- 1
Sell the car for what it's worth. Then pay the bank the difference to get out of the loan. Let's say, for example, the balance is $10,000, and you find a buyer willing to pay you the fair market price for the car, which is $7,500. You and the buyer complete all the required paperwork; the deal is consummated when you pay the bank the remaining $2,500.
2Trade the car in when there are rebates available for a new car purchase. Choose this option if you would rather not sell the car outright. Edmunds reports that new car manufacturers may offer rebates as an incentive for buying a car. Rebates can exceed $5,000, depending on the car being purchased. A $5,000 rebate could be enough to cover your negative equity and get you into another loan that isn't upside down.
3Ask that the car be repossessed. This is an extreme tactic that should only be used as a last resort, but it may be worthwhile to resort to what the banking industry calls a "voluntary repossession." This process is usually undertaken when you can't sell the car because of the negative equity and haven't been able to sell it or trade it in. Arrange for a voluntary repossession by calling your lender. Keep in mind, however, that this is very damaging to your credit report and that you could be held liable for the "deficiency balance" --- the difference between the balance on the loan and the amount the lender receives when selling the car at auction or to a private buyer.
0 comments:
Post a Comment