Not Sure What To Do About Negative Equity?
At Moore’s Chevrolet, we know that sometimes drivers find themselves in a position where they owe more on their vehicle than it’s currently worth. This is known as negative equity, and if you’re in this situation, you may be wondering if it’s even possible to trade in your car. The good news is that you have options, and we’re here to help you understand exactly how negative equity trade-ins work. Whether you’re ready for a new car, dealing with costly repairs on your current one, or simply adjusting your finances, trading a car with negative equity can be a smart move when done correctly. This guide will walk you through what to expect from a negative equity trade-in, your options, and how to make the best decision for your situation by understanding all the terms and ensuring you have the necessary documents. Visit us today in Clarksville, VA!
What Is Negative Equity?
Negative equity happens when your car’s loan balance is higher than the vehicle’s current market value. For example, if you owe $22,000 on your car loan, but your vehicle is only worth $18,000, you have $4,000 in negative equity. This situation is sometimes called being “upside down” on your loan. Many drivers find themselves in this position, especially if they are financed with little or no down payment, choose a long-term loan, or if their vehicle has depreciated quickly. Reviewing your contract carefully is crucial, as it will affect your understanding of the financial implications of negative equity. While it’s not ideal, it doesn’t mean you’re stuck, as a negative equity trade-in may be your best option.
Can You Trade In a Car With Negative Equity?
The process of a negative equity trade-in simply involves determining how to handle the difference between your vehicle’s value and your remaining loan balance. In most cases, the amount of negative equity is rolled into the new car loan for your next vehicle. That means your new loan will include the cost of the new car plus the amount you still owe on your old one.
How Much Negative Equity Can I Roll Over?
The answer depends on a few key factors, including your credit score and lending history, the vehicle you plan to purchase (new or used), the loan terms you qualify for, and your down payment or trade-in. In general, lenders may allow you to roll over a few thousand dollars in negative equity, especially if you’re buying a newer vehicle with substantial resale value. Our finance team at Moore’s Chevrolet works closely with each customer to determine what’s possible based on their individual situation.
Best Way to Trade In Car With Negative Equity
The best way to trade in a car with negative equity is to go into the process well informed and realistic about your goals. Here are the steps we recommend.
1. Get an Accurate Appraisal
The first step is determining exactly how much your current vehicle is worth. At Moore’s Chevrolet, we provide free negative equity trade-in appraisals so you can get a clear picture of your vehicle’s value. You’ll also want to request a payoff amount from your current lender so you know how much is left on your loan.
Subtract your vehicle’s appraised value from your loan payoff. If the result is a negative number, that’s your negative equity.
2. Review Your Options
Once you know the exact numbers, you can look at your options. In most cases, customers choose to roll the negative equity into the new loan, pay the difference out of pocket at the time of trade, or use rebates or incentives to help cover the gap. Sometimes, manufacturer incentives or dealer promotions can significantly reduce the amount you need to roll over. For example, Chevrolet may offer bonus cash or special financing that helps offset the negative equity trade-in. Our team can help you apply all available offers to make your trade-in more affordable.
3. Choose a Smart Replacement Vehicle
When dealing with a negative equity trade-in, choosing a new vehicle that fits your budget and retains its value is especially important. Our team can recommend vehicles that offer strong resale value, low cost of ownership, and favorable loan terms, helping you avoid ending up in another negative equity situation down the line. Opting for a used car can help reduce the amount borrowed and mitigate the impact of depreciation.
How to Trade In A Car With Negative Equity
If you’re exploring how to do a negative equity trade-in and still make a smart financial decision, the key is to look at the whole picture, not just the monthly payment. Be sure you understand the details of your new loan, including the potential for a bigger loan if negative equity is rolled over. At Moore’s Chevrolet, we take the time to walk you through every detail. We don’t just show you a number, we explain how it affects your finances now and in the future. We want you to drive away in a vehicle you love, but also one that helps you make progress toward a more stable financial position.
When Waiting Might Be the Better Option
While trading in a car with negative equity is possible, it’s not always the best immediate solution for everyone. In some cases, keeping your current vehicle a little longer may make more sense. Making a few extra payments or paying down the loan principal can help reduce or eliminate your negative equity over time. If you’re not sure what to do, come see us. We’ll provide a no-pressure assessment of your vehicle, loan, and negative equity trade-in options.
Moore’s Chevrolet Can Help
Negative equity doesn’t have to hold you back from upgrading your vehicle. At Moore’s Chevrolet, we specialize in helping drivers like you find solutions that make sense. From accurate negative equity trade-in appraisals to transparent financing options, we’re committed to giving you the tools to move forward. Whether you’re just starting to explore your options or you’re ready to trade today, our team is ready to help you find the best way to trade in a car with negative equity. Contact our dealership or visit our showroom to get started, and we’ll help you find the most convenient way to trade in a car with negative equity. Visit us today in Clarksville, VA!
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