How to Fix an Upside Down Car Loan

Most people buy cars, especially new cars, with a car loan that can last five or six years, or more. Automobiles, however, depreciate rapidly. When the car is first driven off the lot it depreciates significantly because it is no longer a new car. So almost from the beginning, a car loan is upside down because you owe more than it is worth.

Instructions

1

Determine how much you owe on your car loan. You can call the bank that holds the loan to find out exactly how much you owe.

2

Conduct research to find out what your car is worth. You can determine what similar cars are selling for in the newspaper or on car sales sites. The best way to get a solid number is to research the Kelly Blue Book value of your car.

3

Evaluate the amount you are upside down on, which is the amount you owe over the amount the car is worth. Most car loans are upside down. This isn't necessarily a problem unless you want to sell your car or trade it in.

4

Keep your car. You can trade in your car for a loss and end up owing the cost of the new car plus some of the cost of the old car on a new loan, but that will exacerbate the problem.

5

Continue paying your car loan. The longer you continue paying the loan, the closer it becomes to turning right side up. When your car loan is totally paid off, the car should be worth something even though you will owe nothing.