GETTING OUT AN UPSIDE DOWN CAR ?

I wanted to ask if I purchase a car that’s cheaper than the car I currently have where I’m upside down will that help me to get out of the contract I currently have ? 

6 Answers

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  • Anonymous
    1 month ago

    No.  You still owe on the original loan.

  • Scott
    Lv 7
    1 month ago

    No. Simply put, you owe more on your current car than you could sell or trade it for. This condition is known as being "upside down" or "under water". In any transaction, you would have to financially make up the difference between the cars value and what you owe. You cannot borrow your way out of this. There's no magic solution to fix this situation. Unless you have the cash to pay off the negative equity, which I am guessing you don't - you keep your current vehicle until it's paid off or its value becomes greater than your outstanding loan balance.

  • 1 month ago

    This is a fairly common question but the logic of it is mystifying. If you are upside down on a loan for a car, buying ANY other car, regardless of price, doesn't make the negative equity go away. It has to be dealt with in one way or another.

    That said, if the negative equity is small enough, and the price of the new car is large enough relative to the amount of that negative equity, a dealer/finance company may be willing to roll the deficiency into the new loan -- which would likely put you right back into a new upside down situation. 

    Assuming the loan company is willing to finance 110% of LTV (loan to value), it means the negative equity cannot be more than 10% of the financed value of the new car. Using this assumption, you would have to buy a $50,000 car in order to roll $5000 of negative equity into a new loan. Otherwise, you would need cash to cover all or part of the negative equity.

  • Anonymous
    1 month ago

    Depends on your credit and how much upside down you are. $500 with an 800 credit score, sure. $3000 with a 670, no way. $10k? Not a chance just like you were told 2 weeks ago.

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  • Anonymous
    1 month ago

    No, not unless you can come up with the difference in value with cash. You cannot roll any debt from your current car into the debt you take on for a different car if it exceeds the blue-book retail value of the car you want to have. Any difference must be made up in cash. For example, lets say you owe $6000, but your car is worth $4000, and you wan t to trade it for a $4000 car, you'll need $2000 in cash PLUS the new loan initiation fee and sales tax. 

  • 1 month ago

    You can't get out of the upside down amount unless

    1. you pay the upside down amount

    2. you hold the car long enough that it is no longer upside down. 

    You can't get out of a contract and magically make the underwater amount disappear.

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