How To Avoid A Negative Equity Car loan (and ways to get out of a sticky situation if you don't!)

If you do find yourself with a negative equity car loan

, the important thing to do is work out a way to get out of it before you sell or trade the car in. The most obvious way is to keep the vehicle until enough of the loan has been paid off that the resale value is more than what you owe. If you sell the car with a negative equity car loan still hanging round your neck you will still owe money and have no car to boot. If you trade-in your car, the dealership might agree to pay the remaining loan amount but will then add the extra to your next loan, leaving you with an even larger amount to pay off each month. The best way to extract yourself from a negative equity car loan is to lease your next car. Lease payments are substantially lower than those for loans and therefore might ease the financial burden somewhat, making it easier to rid yourself of your negative equity. Just make sure that you keep the car for the full term of the lease or you will end up in deeper financial trouble.

Take steps to avoid negative equity car loans but if you do find yourself in that situation don't panic don't try to immediately sell it or trade it in as the problem won't go away, it will follow you like a bad smell. Stay calm, take heed of some of the advice in this article and you will gradually climb out of negative equity.

How To Avoid A Negative Equity Car loan (and ways to get out of a sticky situation if you don't!)

By: Jason Deberry

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