Being upside down on your auto financing, when you owe more than your vehicle is worth, can come as a surprise.
Perhaps it was too small of a down payment when you bought the car, too long of a financing contract, or choosing a vehicle you really couldn’t afford.
However the situation arose, here’s some better news – there are several ways to reach positive equity and enjoy a firmer financial footing.
Take a look at the following options, and learn how to finance your next vehicle with Chrysler Capital.
Ways to get out of upside-down financing
Add to your monthly payments
One possible solution is to pay down your principal balance more quickly. This can be achieved with a number of approaches, including putting extra cash toward your monthly payment or making a lump sum payment.
Pay more frequently
More frequent payments could also help. Try splitting your monthly payment and paying half every two weeks, which effectively adds up to another full payment by year’s end.
Hold on to your car
The simplest choice might be to hold on to your car, maintain regular payments and wait until your debt dips below the vehicle’s value. When this happens exactly will depend on factors such as the rate of depreciation in your car’s value and the size of your monthly payment. If waiting doesn’t appeal – you may want to change cars sooner rather than later, for instance – then there are other avenues to pursue.
Trade in carefully
Many people will want to trade in their vehicle and roll any negative equity into the financing for their next purchase. There are several things to keep in mind here. The rolled over balance will increase the size of your debt, so consider budgeting the cost to make sure you can keep on top of it. Pay particular attention to the monthly payment and financing duration within your new agreement. A longer term tends to lower the monthly payment, but the shorter you can keep it, the sooner you can reach positive equity.
Finance your next vehicle with Chrysler Capital
When you’re ready to purchase your next car, get your financing through Chrysler Capital and shop the wide range of vehicles offered by FCA US. Our finance calculators enable you to estimate how much vehicle you may be able to afford and what financing terms work best. Once you’ve run the numbers, apply online and view the latest available offers on Alfa Romeo, Chrysler, Dodge, FIAT®, Jeep® and Ram models. When you’ve found the one, visit a nearby dealership to make it yours.