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How much of a balance can you roll over into a new car loan?
I just co-signed a new car with my partner and now she’d like to get her own vehicle. It seems like it’d be easier to make a single payment each month. Can we roll what I still owe into a new auto loan?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
How exciting—time to clear space in the garage! The amount of money you can borrow is up to your lender, but as a general rule, your car loan shouldn’t exceed 125% of your vehicle’s value.
If you’ve got an outstanding balance greater than your car’s worth, you’ve got an upside-down car loan. The difference between what you owe and your car’s
actual cash value
is known as negative equity. Generally, folks want to get out of an upside-down car loan
as soon as possible because nobody wants to pay for nothing. Consolidating your debts might appeal to you, but your bank may not like the sizeable difference between the loan and the collateral (your partner's vehicle). Before you refinance, consider paying down more of your debt or reassuring your lender with a larger
down payment
.MORE: How to refinance a car loan
View full answer
- Gregory R.
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