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5 Ways to Manage Negative Equity on Your Car

What should I do with my car's title?

If your car has negative equity, it means that you owe more on your car loan than the car is worth. This can be a frustrating and stressful situation, especially if you're struggling to make your car payments. However, there are a few different options available to help you manage negative equity and get back on track. Here's what you need to know about negative equity and what you can do about it.

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Option 1: Keep making your payments

If you're able to make your car payments on time and you don't have any other financial issues, the first option is to simply keep making your payments and ride it out. As you make payments and pay down your loan, the amount of negative equity will decrease. Eventually, your car will be worth more than you owe on it and you'll be in a better financial position.

Option 2: Refinance your loan

If you're having trouble making your car payments or you're paying a high interest rate on your loan, you may want to consider refinancing. Refinancing involves taking out a new loan to pay off your old loan, and it can be a good way to get a lower interest rate or lower monthly payments.

To refinance your car loan, you'll need to shop around for different lenders and compare offers. Keep in mind that you may need to provide proof of income, credit score, and other financial information to qualify for a refinance. You'll also need to consider the fees associated with refinancing, such as closing costs, which can add to the overall cost of the loan.

Option 3: Trade in your car

If you're struggling with negative equity and you don't want to refinance your loan, you may want to consider trading in your car. When you trade in your car, you'll receive a credit towards the purchase of a new car. This credit can be used to offset the negative equity on your old car, reducing the amount you need to finance.


To get the most value out of your trade-in, you'll need to do your research and find out how much your car is worth. You can use online tools like Kelley Blue Book or NADA to get an estimate of your car's value. You can also get an appraisal from a dealership or a professional appraiser. Just be aware that the value of your trade-in may be less than the amount of negative equity on your car, so you may still need to finance some of the difference.

Option 4: Sell your car privately

If you're able to sell your car privately, you may be able to get a higher price than you would by trading it in. This can be a good option if you have a car that's in high demand or if you're willing to put in the effort to find a buyer.

To sell your car privately, you'll need to do some preparation and marketing. This includes cleaning and repairing the car, taking good photos, and writing a detailed description of the car's features and condition. You'll also need to set a price that's competitive but still allows you to cover the negative equity on your loan.

To find buyers, you can advertise your car online, place ads in local newspapers, or post signs in your neighborhood. You can also ask friends and family if they know anyone who's interested in buying a used car.

Option 5: Sell your car to a dealership

If you don't want to go through the hassle of selling your car privately, you may be able to sell it to a dealership. Dealerships are usually willing to buy used cars, even if they have negative equity, and they can often offer a fair price. Just be aware that dealerships are in the business of making a profit, so you may not get as much for your car as you would if you sold it privately.

To sell your car to a dealership, you'll need to do some research and find out how much your car is worth. You can use online tools like Kelley Blue Book or NADA to get an estimate of your car's value. You can also get an appraisal from a dealership or a professional appraiser.

Once you have an idea of your car's value, you can start shopping around to different dealerships to see what they're willing to offer. It's a good idea to get quotes from multiple dealerships so you can compare offers and choose the best one. Just be sure to be upfront about the negative equity on your car and be prepared to negotiate.

Option 6: Surrender your car

If you're unable to sell your car or make your car payments, you may need to consider surrendering your car. Surrendering your car involves returning it to the lender and walking away from the loan. This can be a difficult decision, especially if you have a sentimental attachment to your car or if you're concerned about your credit. However, it may be the best option if you're unable to keep up with your payments and you don't have any other options.

To surrender your car, you'll need to contact your lender and let them know that you're unable to make your payments. You'll need to provide proof of ownership and return the car to the lender. The lender will then sell the car to cover the balance of your loan. Just be aware that surrendering your car will have a negative impact on your credit, and you may have difficulty getting approved for loans or credit cards in the future.

In conclusion, there are a few different options available to help you manage negative equity on your car. Whether you keep making your payments, refinance your loan, trade in your car, sell it privately, sell it to a dealership, or surrender it, there's a solution that can work for you. Just be sure to do your research and consider all of your options before making a decision.

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