How to Roll Negative Equity Into a Lower Interest New Car Loan

"Negative equity" is a bad term for most people. It occurs when the value of your car is less than what is owed on the loan, and is very common for long-term loans. Unfortunately, you may not have a choice in terms of when you need to apply for another car loan. Perhaps your car no longer works or is simply unreliable. If this is the case, you can apply for a roll-over.

Instructions

1

Research dealers who accept negative-equity roll-overs. Not all dealers accept these types of loans.

2

Review the terms of the roll-over carefully. Most dealers will not dissolve your balance. Instead, the negative balance is rolled over into the financing of your new vehicle; that is, the balance will be "rolled over" to your new loan balance.

3

Opt for the dealer rebate instead of a low introductory interest rate. The dealer will likely offer you a lower rate on your loan, especially with the roll-over. Choosing the low rate keeps the loan value high, and delays payment. However, the rebate will reduce the loan amount, which might also eliminate the negative-equity add-on.

4

Consider early payment options. Avoid rolling into a lower interest loan that comes with prepayment penalties.

5

Avoid long loan terms. While this will lower your interest rate, it will also increase the amount of interest paid over time. Your best option is a low rate, with a rebate which lowers the negative equity roll-over within the shortest term available.