What happens if the amount owed on a car loan is worth more than the value of the car when you want to sell?
I have a car that I want to sell. Unfortunately, the balance of the loan is more than the value of the car. What happens when I go to sell the vehicle?
“The situation you’re currently in is also known as an upside down car loan.
If you sell your car to a private party, you’d take the amount you get from the sale and put it toward your loan balance. However, you’re still on the hook for the rest of the loan balance, and now you won’t have a car, which seems like a raw deal.
Another option is to trade your car in at a dealership. When you do this, they’ll pay off your loan with the amount of the trade-in. Then, they’ll roll the leftover amount into the new loan.
While this will allow you to get a new car, you may be upside down on a loan again unless you’re able to get a great financing deal or make a large downpayment.
I’m sure you’re already paying for car insurance on your current car. Keep in mind that whenever you finance a vehicle, the lender requires full coverage. If you do get a new loan, even on an older vehicle, you’ll still need higher coverage.
Full coverage can be pricey, especially if you use the lender’s insurance, but you can save money by comparing rates. Jerry does all the hard work for you, pulling quotes from the top 50 companies and delivering the best deals to your phone in minutes. Jerry even does all the paperwork for you so you can just relax and enjoy your new car.”
MORE: What Is a Car Lien?
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