Toyota dealership serving the Mint Hill area Explains Being Upside Down on Car Loans

Dec 13, 2012

When you owe more on your car loan than your car is actually worth, you are considered to be “upside down” on the car loan. Your friends at Mint Hill Toyota want to share some tips that may not only help explain the situation, but also offer a few solutions to get right side up again.

Car Accidents and Upside Down Loans

The biggest issue with having an “upside down” car is if you should get into an accident. Insurance companies will typically only pay you what the car is worth – not how much you still owe on your loan. This means if you are in an accident that totals your car, you will still owe the difference on your car loan and be without a car.

Getting a New Car When You Have an Upside Down Car Loan

Getting a new car can be tough if you are “upside down”, but not impossible. You still have a few options that can upgrade your vehicle situation. The simplest and best situation is to sell your car on your own rather than trading it in to the dealer. Simply said, if you can find somebody to buy it for what you still owe on the loan, then you don’t have a car loan balance to worry about after you sell the car.

There is another option for dealing with upside down loans when you need to get a new car, but your friends at Toyota serving Mint Hill want you to consider this carefully. You can roll a remaining balance of a car loan after you trade in a car onto the back of a new car loan. The problem with this is that you will most likely be upside down on your new car loan before you even drive it off the lot.