Definition Of Negative Equity Car

If you owe more on your car loan than your financed car is worth it has negative equity.

Definition of negative equity car. In car finance terms negative equity is when your car is worth less than your outstanding finance. Negative equity on a car loan means that you owe more money than the vehicle itself is worth. Actual value of your car. This post covers everything you need to know about negative equity and some tips for getting yourself back on stable financial ground.

Understanding how negative equity works can help you make a better informed choice about a new auto loan. In car finance terms equity refers to the difference between the resale value of your vehicle and the outstanding finance owed to the lender. If the value of the vehicle is greater than the amount owed you have positive equity. In essence you will need just two items to calculate your car s equity.

If the negative equity amount is rolled into the new loan the longer your loan the longer you will take to reach positive equity in the vehicle. This can impact your ability to sell or trade in your car for a new one. Negative equity definition is a situation in which the amount of money that a person owes for something such as a house or a car is more than the thing is worth. The borrower is responsible for the outstanding balance.

If the car you own is worth more than the outstanding balance you still owe on the loan it has a positive equity. We ve collected some of the most frequently asked questions about outstanding car finance and negative equity to help you understand what it is and what can be done about it. To report problems with dealer advertising and sales and finance contracts including ads that falsely promise to pay off the negative equity in your car loan contact. Outstanding finance is the amount still owed on a vehicle.

That negative equity will need to be paid off if you want to trade in your vehicle and take out an auto loan to purchase a new vehicle. Negative equity simply means that you owe more on your car loan than the vehicle is worth also referred to as being upside down on your car loan. Current balance of your car loan. If you wish to sell the car during your finance agreement and the vehicle is worth less than the amount owed you ll need to cover the shortfall.

For example if your vehicle is valued at 10 000 but you still owe 15 000 on your loan you have negative equity of 5 000.