Everyone wants to upgrade into that latest model with all the cool bells and whistles. Unfortunately, many of us are upside down in our current auto loan so trading it is a little more difficult than normal. What does it mean to be upside down in a car loan and how can I overcome it? Here are a few helpful tips to help you overcome it.
Upside Down Car Loan: An upside down car loan is a loan where you owe more on the vehicle than what it is actually worth. To understand if you fall into that category (and you probably do since more than 70% of all consumers are upside down currently), visit a website where you can determine what the actual wholesale value of your vehicle is. Once you determine that, you can compare that to the amount you and find out for yourself if you are indeed upside down.
What to Do with An Upside Down Car Loan: Just because you may find yourself in one of those upside down car loans, all is not lost. There are options available to you using an online lender. Online lenders offer flexibility that allow you to still trade in that vehicle even if you owe more on it than what is worth. Those lenders allow you to roll in that “negative equity” into a new loan. This does not fix the upside issue, but it will allow you to upgrade that collateral to the latest and greatest model.
Can I Ever Not be Upside Down?: Well, the short answer is yes. However, getting out of an upside down car loan and actually building equity can be a difficult one, especially if you like to trade every 18-24 months. The easiest way to build equity is to keep a vehicle long enough that you can pay down more than half of the original loan balance. Hopefully by doing so you will build positive equity so when you go to trade you can actually use that vehicle as positive down payment instead of needing to roll in more negative equity into another loan.
Overcoming being in a upside down car loan can be done. Do not get discouraged. Find a good online lender to work with and they can assist you. You can find more helpful information related to car financing and refinancing along with useful negotiation tips to use with the dealer online at OpenRoad Lending.
About the Author: Chris Goodman has been in the auto finance business for more than 20 years and has assisted thousands of consumers with their automotive loan needs including overcoming an upside down car loan. His articles are insightful and assist consumers in understanding the ins and outs of auto finance. OpenRoad Lending is an online lender with a consumer friendly website providing auto financing solutions to consumers in the process of purchasing a new or used vehicle or refinancing their existing auto. Visit the website at http://www.openroadlending.com for more information about how easy it is to get a car loan.