What do you do when your car loan is higher than the value of the car?

Having a car loan and keeping up with your monthly payments is stressful. But what if you have an up-side car loan, which means the amount you owe on your vehicle is higher than its actual value?

The monthly volume of new car loans in the United States is over $60 billion.

It’s possible if you offer a small down payment. Additionally, as the car’s value decreases, the total amount you owe on it rises above its market value. Perhaps you didn’t put any money down when you purchased a different vehicle. Or maybe you settled on low, “simple” regular installments by extending your advance to 72 or even 84 months.

Regardless of how you arrived, now is the time to make your up-side car loan into the right side and avoid difficult situations from now on.

Sell Your Vehicle

You can also trade your automobile for a lower-cost set of wheels at the dealership. Remember that, like when you sell your vehicle, you’ll still be responsible for paying off the remaining car loan. However, owing $5,000 is far easier to manage than owing $12,000.

Refinance Your Debt

Conceptually it could be challenging to pull off. As a depreciating asset, there isn’t much wiggle space other than extending your payments to a longer period to reduce your monthly payments, adds DeLorenzo.

You’ll have a difficult time refinancing for a lower interest rate. While you would pay more interest fees on car loan, the smaller monthly payments may help you remain afloat.

Make an agreement with your lender

In addition to refinancing your car, consult with your current lender to determine your choices. Ask if they will work with you after describing your financial situation. Christensen states, “Lenders are not in the business of seizing vehicles.” They prefer to avoid the hassle of repossession and vehicle auctions by working out a reasonable repayment schedule for a car loan. 

Another piece of advice? You have a better chance of coming to an agreement that is more favorable to you if you are in good standing with the lender, which means you haven’t missed or been late on any car payments.

Find Ways to Stay Timely on Your Payments of Car Loan

Matheson recommends cutting living expenditures or earning more if you have trouble making monthly payments. For example, pick up an extra shift or work overtime in your job.

Also, at your full-time job, consider how you can add value to your employees so that when it comes time for annual reviews, you can make a case for why you deserve a raise. 

It happens when your car depreciates faster than your scheduled payments. Now, there are several options for you to consider:

1. Increase your monthly payment and repay the loan earlier than the scheduled timeline.
2. Keep the car in excellent condition with regular service records.
3. Don’t put unnecessary miles on your vehicle (Get rentals for vacation, road trips, etc.)
4. Once paid off, you can do the trade-in & get a new car, or sell it off and then get a new vehicle from the dealership.
5. Please don’t forget to negotiate when you’re looking to get your next car.

To save time and money, you may hire a car concierge service company that negotiates to get you the best deal on your overall transaction. 

You don’t have to feel trapped by a car installation that’s difficult to keep track of. It is a bad situation. However, determining which option is ideal for you and your ongoing needs necessitates weighing the advantages and disadvantages of each and knowing what is doable for your current situation.

At Car Concierge Pro, we provide a hassle-free and cost-effective car buying experience for our clients in the USA and Canada. We have saved our clients over $550,000 of their hard-earned money. Request a Concierge to learn more!