This is certainly referred to as negative equity, or being “upside down” on your own loan.
There’s practically nothing wrong using this – so long as you intend on keeping the automobile and paying down the loan.
But there are occasions whenever you may choose to trade right into a new automobile before the loan is fully paid down.
In this situation, negative equity turns into a big issue.
You may have experienced adverts where dealers claim they could trade you out of your automobile “no real matter what your debt”.
They may be in a position to trade you from the car, but just what they do not inform you is you owe that you will still have to pay off whatever. There isn’t any free meal with regards to equity that is negative.
You have got three choices when you are in this case: