How to Keep from Going Upside-Down on a Car Loan

Beware Bad Car Loans!We are constantly looking for the best possible deals in auto transport [cheap auto transport], and we know that buying a car itself can present similar challenges to a budget. Not only is it difficult to find the right car for the right cost; but in extreme cases, customers can even become tied to the car – strapped to it (also called “buried” or “tanked”) with an upside-down loan.

In an upside-down loan, the customer owes more on a vehicle than it is worth. For example, the market value of the car might be at $10,000, while the amount owed is still at $15,000. Below, let’s look at how to get out, and how to avoid getting into that position in the first place. We’ll also briefly discuss the best nationwide services for auto shipment, so that you don’t overpay on that either.

What Negative Equity Is & Typical Solution

In the above example, the customer is upside-down $5,000. That $5,000 is also referred to as “negative equity.” There are several ways to solve the negative equity issue at the dealership, but we will focus in this brief piece on the most common solution. In our business, we use an uncommon but effective solution: taking the best leads for transporting a car cross-country and pitting them against each other, enhancing competition between carriers to lower prices.

Typically, negative equity is solved by adding the amount you still owe on your old car onto the price of the new one you’re buying. However, negative equity becomes a problem if it’s too sizable for a bank to want to finance. The bank will only allow credit for a car up to a certain amount over it’s value (an excess figure called “the carry” in the auto sales business).

In the automotive sector, prices can easily balloon. We help reduce costs for our customers by providing up to 8 quotes at once; when carriers know they are competing, they discount prices. A high-quality auto shipping broker acts in a similar manner. However, without a cross-quoting system, you won’t necessarily get competition-based discounts.

Buying for Tomorrow, not Today

According to Motor Trend, the best way to avoid going upside-down in a car loan is to think about the future. That means buying based on resale value rather than simply on price. For example, the resale value of a car in two years should not be a large amount less than what you are paying upfront.

Autos In Transit is your competitive-quoting service for licensed and bonded auto shipping throughout the United States. We can give you up to 8 quotes now at the top of this page. Be sure to take advantage of our discount on auto transport for the troops if you are an active or veteran military member.