Trading In a Car With Negative Equity? You May Have More Options Than You Think
Owe More Than Your Car Is Worth? You May Have More Options Than You Think.
Being "upside down" on your loan can feel like you're stuck. At Garden State Honda, our team works with drivers in this situation every day, and in most cases we can find a path that gets you into a vehicle that fits your life and your budget.*
What Is Negative Equity?
Negative equity means you owe more on your auto loan than your vehicle is currently worth. It's also called being "upside down" or "underwater" on your loan.
It's more common than you might think. Long loan terms, small down payments, high mileage, and normal depreciation can all leave a balance that's higher than your car's trade-in value.
The good news: negative equity doesn't automatically mean you have to keep a vehicle that no longer works for you.
A Simple Example
| Remaining loan balance | $22,000 |
| Current trade-in value | $18,000 |
| Negative equity | -$4,000 |
Example for illustration only. Your numbers will vary.
Ways You May Be Able to Move Forward
Every situation is different. Depending on your credit, your vehicle, and your goals, one or more of these options may work for you.
Take Advantage of Incentives
Current Honda offers and dealer incentives, when available, may help close the gap on a new vehicle.
Choose a More Affordable Vehicle
Moving into a Honda with a lower price point, including a Honda Certified Pre-Owned model, may help offset the difference.
Consider a Lease
For some drivers, a lease may offer a lower monthly payment that makes it easier to manage the remaining balance.
Put Money Down
A cash down payment or rebate can reduce or cover the gap, which may help you qualify for better terms.
Roll the Balance Into a New Loan
In many cases, the remaining balance can be included in the financing on your next vehicle, subject to lender approval.
Know Your Real Numbers
Many drivers are surprised to learn their trade is worth more than they expected. A quick appraisal is the best first step.
We Help Drivers in Most Situations Find a Way Forward
We can't promise a solution for every situation, but we work hard to find one for as many drivers as possible. Here's what you can expect:
- An honest, no-pressure review of your current loan and trade value
- A finance team that works with a wide network of lenders
- Clear explanations of every option, so you can decide what's right for you
- A large selection of new Hondas and Honda Certified Pre-Owned vehicles
- Help for a wide range of credit situations
Three Simple Steps
Value Your Trade
Use our free Kelley Blue Book trade-in tool to see what your vehicle may be worth. It only takes a few minutes.
Review Your Options
Our team will contact you to go over your numbers and walk you through the options that may fit your situation.
Drive Home Happy
Choose the Honda that fits your needs and your budget, and leave your old loan behind.
Find Out What Your Trade Is Worth Today
Knowing your vehicle's value is the first step to understanding your options. Get your free Kelley Blue Book Instant Cash Offer and a Garden State Honda specialist will reach out to help.
Negative Equity FAQs
Can I trade in a car with negative equity?
In many cases, yes. Depending on your credit and the vehicle you choose, the remaining balance may be paid off as part of your new purchase or lease, subject to lender approval.
How do I know if I have negative equity?
Compare your loan payoff amount (available from your lender) to your vehicle's trade-in value. If you owe more than it's worth, you have negative equity. Our Kelley Blue Book trade-in tool can help you estimate your value.
Will rolling over negative equity raise my payment?
It can, since the remaining balance is added to your new loan. That's why we review all of your options, such as a lower priced vehicle, a lease, a down payment, or available incentives, to help keep your payment manageable.
Do I need good credit?
Not necessarily. Our finance team works with a wide network of lenders and helps drivers with many different credit profiles. Approval and terms depend on your individual credit history.
Is the trade-in appraisal free?
Yes. Getting your trade-in value is free and there's no obligation to buy.
Ready to Talk Through Your Options?
Visit Garden State Honda at 800 Route 3 West, Clifton, NJ 07012, or give our team a call.
973-777-1600*Not all customers will qualify. All financing and lease offers are subject to credit approval by participating lenders. Negative equity, if any, may be added to the amount financed, which may increase your monthly payment and total cost of financing. Trade-in values are estimates and are subject to in-person vehicle inspection. Garden State Honda cannot guarantee a specific outcome for every situation. See dealer for complete details.