Options for Upside Down Car Loans

Are there any options for upside down car loans? Do you feel stuck? Like you are never going to get out of your loan? There are a few options for your upside down car loan.

What is an Upside Down Car Loan?

Here are three things you should know about upside down car loan.

  1. An upside down car loan is a loan that is worth more than your car.
  2. You can avoid an upside down car loan by having a good down payment and knowing your loan details. The less you borrow, the better the loan. The lessens the possibility of getting into such a situation.
  3. If you find yourself needing options for your upside down car loan, don't worry. You do have options. You just need to find the correct solution for you.

How to Avoid an Upside Down Car Loan

There are several things to do to avoid those types of loans. Make a down payment. A down payment will lower your loan amount. This will save interest. If you can manage a higher payment, take the option with the least amount of payback time. Instead of taking the lower payment longer, make a higher payment in a shorter amount of time. Pay your longer term loan off early. Be careful to read the fine print. Make sure there is no penalty to pay off the loan early.

What Options are there for Upside Down Car Loans?

Pay down the loan quicker. By paying extra on the principal every month, you could save a lot of interest thereby reducing the upside down amount. You could sell the car to another individual and put the entire selling price on the loan. Add the cash that will pay off the rest of the loan and be done with it. You can try  to trade the car in and include your balance of your upside down car loan. You would still be upside down, but you will have a new car. Your bank or credit union may refinance you at a lower interest rate.

What You Should Do

If you are already in an upside down car loan, you have three good options; keep paying the loan until it is paid off, sell the car to an individual, use it as a trade in and still be upside down. The choice you make needs to fit your personal situation. Upside down car loans are very common with car loans. As long as your car is still running, pay for it and drive it. You have to repay the loan one way or another.

Learn From Your Mistakes

Once you get your upside down car loan taken care of, do what you can to not let that situation happen again. The next time you purchase a car, make sure you make a down payment. Take the higher faster payment option. Stick to purchasing used cars. The do not depreciate quickly like new cars do. It is your finances, don't agree to pay more than you can afford.

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