Negative equity or being “upside-down” can be common in the early stages of vehicle ownership.  This just means the payoff on yur  vehicle is higher than the current market value.  For instance, you buy a new Chevy Tahoe and owe $35,000, then 1 year later the market value on your Tahoe is only $30,000.  This would leave you owing $5000 more that current value of vehicle.

There is not a forgiveness button to push to get rid of negative equity.  You agreed to pay the bank the loan amount and that becomes an obligation the bank will hold you to.  Eliminating negative equity is done by making extra principal payments on your vehicle above the minimum monthly payment owed to your lender.  Say your normal payment is $525, and you make a payment of $1,000 during that month, the extra $475 would go straight towards principal.  If you don’t prefer to make extra payments, just keeo your car and eventually (in maybe 1-2 years) your vehicle payoff will catch up to depreciated value of your car.

Often times, a customer’s vehicle needs may change earlier than anticipated.  This could create a situation where customer has negative equity if they bought current vehicle with no downpayment or took extended financing terms.  If a customer does not want to pay down their outstanding loan amount, it may be possible to to trade their vehicle.  Rebates can be the best friend of customer with negative equity.  Say you owe $2000 more on your vehicle than its worth.  Find a vehicle with a $3000 rebate and you make up the $2000 and still have $1000 to use as a downpayment.

Doug Henry Chevrolet in Tarboro is an expert at helping customers trade out of their negative equity.  Consult with us and we can find a Chevy for you with a big rebate.  We can also help by giving you a better trade allowance than other local dealerships.  Our growing pre-owned business allows us to pay you more for your trade because we have huge demand.  Come see us and you’ll see the difference.