This is a good question that a lot of people are facing today. First of all, this is called an upside down loan, and it can be a bit tricky to get out of, but it is something you can do. The key is to work your way out of it so that eventually you are out from the upside down debt.
Start by knowing the true value of your car. Use Kelley Blue Book, the NADA guide and the Black Book to find an average of what your car is worth. Knowing the value of your vehicle can give you a clearer picture when you go to the dealership to trade your car in for a new one.
Next, do some research on the dealerships in your town. Often manufacturers will offer incentives called "Cash Back" incentives to entice you into one of their new vehicles. Sometimes the cash back incentives can help cover the amount you owe on your previous loan. The local newspapers and the dealer websites are great resources to learn of these specials.
Most dealerships will consider paying off the loan for you and rolling the balance into your current loan, even without one of these incentives. However, this may sting a little because now you will essentially be paying interest on top of interest and still end up with another vehicle that you will owe more on than what it is worth.
A good idea if you decide to take this route is to do your best to pay down your auto loan early by paying extra each month. Even $25.00 extra per month can help you shrink the balance that they rolled over from your old vehicle.
Another thing would be to use your savings account and put down a substantial down payment for the next car you buy. A large down payment shows the dealership that you are serious about buying a car. And, it can help shrink the amount that you are upside down on.
Rather than ask yourself "How can I trade in my car if I owe more than it is worth?" you may want to consider selling the car yourself. Again, determine the value of your car and advertise it as "For Sale by Owner". Typically, you will gain more profit by selling the car outright yourself.
Once you have sold the car, pay off the loan and go in search of a new vehicle. The relief of stress will feel wonderful once you are out from an upside down car loan.
By Mike Reitz
Start by knowing the true value of your car. Use Kelley Blue Book, the NADA guide and the Black Book to find an average of what your car is worth. Knowing the value of your vehicle can give you a clearer picture when you go to the dealership to trade your car in for a new one.
Next, do some research on the dealerships in your town. Often manufacturers will offer incentives called "Cash Back" incentives to entice you into one of their new vehicles. Sometimes the cash back incentives can help cover the amount you owe on your previous loan. The local newspapers and the dealer websites are great resources to learn of these specials.
Most dealerships will consider paying off the loan for you and rolling the balance into your current loan, even without one of these incentives. However, this may sting a little because now you will essentially be paying interest on top of interest and still end up with another vehicle that you will owe more on than what it is worth.
A good idea if you decide to take this route is to do your best to pay down your auto loan early by paying extra each month. Even $25.00 extra per month can help you shrink the balance that they rolled over from your old vehicle.
Another thing would be to use your savings account and put down a substantial down payment for the next car you buy. A large down payment shows the dealership that you are serious about buying a car. And, it can help shrink the amount that you are upside down on.
Rather than ask yourself "How can I trade in my car if I owe more than it is worth?" you may want to consider selling the car yourself. Again, determine the value of your car and advertise it as "For Sale by Owner". Typically, you will gain more profit by selling the car outright yourself.
Once you have sold the car, pay off the loan and go in search of a new vehicle. The relief of stress will feel wonderful once you are out from an upside down car loan.
By Mike Reitz
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