Auto loan calculator with negative equity12/12/2023 ![]() ![]() GAP waivers and GAP insurance protect your wallet should your vehicle be deemed a total loss while you still owe money on it. This fee will wipe out any savings you might’ve earned from paying off the loan balance early. If you can pay towards the principal either from savings or a sudden windfall, like a tax refund or bonus from work, that would be ideal.”īefore you start making payments though, check to see if your loan has a prepayment penalty. If the borrower has the ability to do so, making extra payments makes the most sense. Roger Douville explains, “Most people want to trade their vehicle simply because they have grown tired of the current vehicle or want something different or newer. If you have the money, pay down the loan principal in order to reduce the interest accrued over the life of the loan. But there are steps you can take in order to get yourself in a better financial situation than you’re currently in. You’re probably not going to convince someone to buy your car from you for more than it’s worth. The strategy is different if you have time,” says RateGenius Chief Lending Officer Roger Douville. “The decision to act on a negative equity position is really predicated on the urgency of the need. So what can you do if you find yourself in one of the above situations?Ĭalculate Your Savings 5 Options When You’re Stuck With an Upside-Down Car Loan When you’ve got negative equity, you’re still on the hook for the balance of the loan, even if it’s significantly higher than the current car value. You want a safer vehicle with upgraded features, so you decide to sell.Gas prices rise, and you now need a more fuel efficient car for your long commute.You move to a new city where you don’t need a vehicle anymore. ![]()
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