How to Sell a Car With Negative Equity

The life of your car loan may outlast the life of your car. If you took out a 72-month loan with small monthly payments, you'll find yourself quickly slipping into a negative equity situation, which could make it financially difficult for you should you decide to sell your car -- or if it is totaled in a collision. If you made a small down payment (or no down payment) and your credit is bad, giving you a high interest rate, you will be dealing with negative equity as you work to pay your vehicle off.

Instructions

1

Talk to your loan company or bank about modifying the terms of your loan contract. Modifying your loan contract allows you to get a lower interest rate or a higher monthly payment so you move more quickly to gaining positive equity, according to Loan.com. Make sure you modify your contract terms sufficiently that you can build equity faster than the vehicle depreciates. Once you have modified your loan's terms and achieved positive equity, sell the car and pocket the difference.

2

Trade in your current vehicle, even though you have no equity in it. Lease your new vehicle. Even with the amount you still owe on your old car, the monthly lease payments on your lease vehicle will be lower than the the payments on your current vehicle, even after you add in the amount of your negative equity, according to Lease Guide. The catch with this strategy is that you have to pay off the full lease on your leased vehicle so you don't end up in a negative equity situation again.

3

Sell your car to a new buyer, then pay what you owe on your loan, according to Loan.com.