4 Tips To Sell Your Car With Negative Equity

If your car’s current value drops to a value which is lower than what you owe to the bank, you face the problem of negative equity.

Negative equity can make it more difficult to sell your car without facing a significant loss. Some people face the problem of negative equity even in the first year of their loan.

There are a few ways you can sell your car if you have negative equity. Given below are a few tips

  1. Try To Turn Your Negative Equity Around

Paying off your negative equity is one of the more straightforward ways to break even and sell your car faster.

First, calculate the amount of negative equity you have. In order to do this, you will need to subtract the loan payoff amount from the current value of your car. While considering the payoff amount, make sure you include additional fees and taxes. You can easily calculate your negative equity with this auto loan calculator with trade in.

You can pay off your negative equity in the following ways.

  • Try to make larger loan payments every month. This can help you get rid of your negative equity faster. However make sure your loan contract allows you to do this.
  • Make a lump sum payment to your lender for the amount of your negative equity if you have sufficient funds. This can put you in a better position for your current loan.
  • If you have time to spare, try getting a part time job or pick up other side hustles which will help you make extra income. You can use this money to pay off your negative equity.
  1. Roll The Negative Equity Into A New Auto Loan

Many people go down this route if they don’t have enough money in their bank to pay off their negative equity.

The amount of negative equity you have is rolled into your new car loan and the dealership usually pays the bank what you owe. This sounds simple enough but there are a few disadvantages.

Not only will your new loan be bigger but you will also have to pay higher interest rates on your new loan. You might even be charged other additional fees. Many dealers try to get people to buy new cars by saying that they will pay off their negative equity but in reality they just add it to your new loan while charging high rates of interest.

If this is the only option you have, keep the following points in mind.

  • Instead of purchasing a new car, try to get one which is one or two years old. Since it is going to be much cheaper, you won’t need to borrow a lot for your new loan and interest rates will also be lower.
  • Consider applying for a shorter term loan. This will reduce your interest rates even though you will be paying more per month.
  • Get a pre approved auto loan. It might take a little more time and effort but you can save a good amount of money with this method.
  1. Sell Your Car Privately

Selling your car privately will help you save a lot of money but it can be quite hard to accomplish.

You have to make sure to review the terms of your loan contract to see if this option can be pursued and talk it over with your lender.

The biggest advantage of this method is that you will make more money if you sell your car privately compared to trading it at a dealership. The difference can even amount to a couple thousand dollars.

However you have to put in a lot of work in advertising your car, finding prospective buyers, filling a lot more paperwork, preparing maintenance records and giving test drives.

It can be worth it if you end up being successful.

  1. Pay The Difference

If you really want to sell your car and get rid of your negative equity, the simplest way is to sell your car and pay the difference.

If your negative equity isn’t high and the difference can be paid off easily, you won’t have much of a loss.


It is always better to prevent negative equity instead of going through the hassle of selling your car which is worth less than the amount you have to pay on your loan. You will end up saving valuable time and energy.