Does McFadden Honda Accept Negative equity deals?
What is Negative Equity?
Most people need to get a car loan in order to pay for them. Some cars also depreciate very quickly — especially new ones. Because of this, it’s not unusual for car owners to end up in a financial situation referred to as "negative equity" on their vehicle. This happens if you owe more money on an auto loan than what the vehicle is worth, this is also referred to as being "up-side-down".
How does it happen?
From buying a car you can’t afford, to getting stuck with a high interest rate, there are many ways to end up with negative equity on your vehicle. As you pay off your loan, the amount you owe will eventually go down enough to balance out with the value of what your car is worth or even become positive equity.
What are my options?
Having negative equity is quite common, and it isn't always a problem, it usually only becomes an issue when your loan term ends and are considering selling your car or trading your car in. There’s plenty of reasons to trade in your old car — even if it’s not paid off yet. Maybe you have another child on the way and need to upgrade to a minivan, or maybe it’s time to move on to a new, more fuel-efficient hybrid car.
What do I do next?
Have your vehicle appraised
If you decide to do this McFadden Honda will want to know the payoff value of your current loan, so you'll need to find that out from your current lender. We'll take your vehicle’s entire equity to determine its trade-in value. If you have negative equity, the amount you’ve paid off your loan will count as equity towards a new car. For example, if you still owe $15,000 on your car, but that vehicle is only worth $10,000, the $5,000 gap needs to be covered to close out your loan or rolled into a new one. l.
We'll contact your lender
Once you’ve agreed to trade in your vehicle for one that the dealership offers, they’ll handle the financials. If your old vehicle has negative equity, McFadden Honda will contact your financial institution to consult the new loan agreement. Once this agreement is approved, the dealership will take possession of your old vehicle. Dealerships make some of their profit through used-car sales and view trade-ins as replenishment to their car inventory.
Find out what it will cost
One thing to keep in mind is that every thousand dollars you roll into the next loan can easily increase the monthly payment by $20. That means carrying $3,000 over to a new loan would result in a car payment that is about $60 more per month than it would be if there was no negative equity.