What do I do if I've got an upside-down car loan and I want to buy a new vehicle?

My Toyota is too small for me now that I've got a second kid on the way. I want a new, bigger vehicle, but I'm upside-down on the Toyota. What do I do?

Answer provided by
Johnny Puckett
Answered on Apr 08, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
“If you plan on trading in a car that you have negative equity in, you are still going to owe the difference between what the dealer offers you for the car and the amount that is left on the loan. While you can pay that difference in cash or roll it into the next car loan, it might be better to reduce your negative equity before signing anything.
You can reduce your negative equity by paying extra towards the loan; refinancing the car loan could also help. You would also be better off selling your car privately, because you can typically get more for it than most dealers will be willing to offer for trade-in value. “

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