Negative equity on a car occurs when you owe more on your car loan than the car’s current market value. This can happen due to several reasons such as depreciation, wear and tear, and accidents. For instance, if you take out a car loan of $20,000 and make payments for two years, and the car’s value decreases to $15,000, while you still owe $18,000, you end up with negative equity of $3,000.
If you’re in a situation where you owe more on your car loan than your vehicle is worth, and you’re looking to sell that car, financing negative equity may be a viable option. Essentially, this means taking out a new loan to cover the difference between what you owe on your existing loan and the actual value of your car. This allows you to pay off your current loan and transfer ownership of the car to the buyer, without having to come up with the difference out of pocket.
At Don’t Trade It In, we pay more for cars, and we’ve teamed up with LightStream to provide you with a solution for negative equity on your car. But is there a limit to how much negative equity you can roll into an auto loan?
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How much negative equity can you roll into an auto loan?
One thing to keep in mind is that there is no maximum amount you can finance when it comes to negative equity. However, there is a minimum requirement if you want to finance negative equity with our partner, LightStream. To do so, the amount you’re financing must be at least $5,000. If your negative equity is less than $5,000, you can use the excess loan proceeds to pay down your loan when your first statement arrives.
At Don’t Trade It In, we understand that financing negative equity can be confusing and overwhelming, which is why we’re here to help. When you sell your car with negative equity to us, we’ll guide you through the process of financing negative equity with our partner, LightStream. We won’t leave you to figure it out on your own. In fact, we’ve provided step-by-step instructions on our website here to help you understand the process. And if you need further assistance, our team is always available to answer your questions and provide additional support. Contact us today for more information on how to sell your car to Don’t Trade It In and how we’ll help you finance negative equity.