SERIES: Sell Car With Negative Equity – Part 4

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Part 3 – Sell The Car With Negative Equity – Option A – Pay Off The Balance

Part 4 – Sell The Car With Negative Equity – Option B – Transfer The Negative Equity Balance

In this series, we are assuming that we have a car with an actual value of $12,000 but the loan balance is $18,000.  This means that the car has negative equity of $6,000.

This is quite the lovely situation, but it is possible to make the car leave.

Obtain A Signature Loan From The Bank or Credit Union

One usually must have decent credit to obtain a signature loan.  Obtain a $6,000 loan from the bank.  Next, find a purchaser who is willing to pay $12,000 for the vehicle.  Use the signature loan money to pay off the negative equity portion so that the title is clear.  With this one transaction, the debt has been reduced by 66% – from $18,000 to $6,000!

Transfer The Negative Equity Balance To A 0% Credit Card

I really do not like credit cards, but I really do not like huge car payments and car loans either!  If one has the option to roll the negative equity to a credit card at 0%, it will allow the car to be sold and all of the subsequent payments on the remaining $6,000 will go directly to principal!  I have also seen several credit cards that offer 2.99% for the life of a balance transfer.

Option B does not entirely eliminate the debt or the payment, but it will substantially reduce it!  It will certainly help one's journey to financial freedom obtain serious traction.

In the final part of this series, I will be sharing some side benefits to eliminating a car with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

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3 Responses to “SERIES: Sell Car With Negative Equity – Part 4”

  1. Karen September 18, 2008 at 6:48 am #

    We are really wanting to take this advice. Our payoff is $9800 and the Private Party Value is $7450, so we would only be upside down by $2350,if it truly sold for the average. But the problem we are facing is that we would still need to replace that vehicle for transportation. I know that the replacement should be something very, very inexpensive, but along with taking on a signature loan for the upside down equity, we would also have to tack on funds for the replacement car. Is this still the best thing to do?

  2. Moneymonk September 18, 2008 at 8:55 am #

    This book is AWESOME!!!

    http://www.moneymonk.net/2008/09/book-review-i-was-broke-now-im-not.html

  3. Jeff Plain September 18, 2008 at 11:46 am #

    Joe, one day I would love to sit down and see how I may be able to help the cause for NewSpring. I’ve been a big Dave Ramsey fan and know the principles that you share are very much in line.

    I took a few steps to my debt freedom yesterday. Sent off a check to payoff my car 2 years early. Also sent a check to pay in full my daughters braces.

    Three debts left. Our house (will be sold next year when my wife goes to Law School). Her car (three years left, will pay it off next month) and finally her student loans from her Master’s Degree. Still debating if I should pay them off before Law School so that I can keep some cash onhand to handle the transition from 2 paychecks to 1.

    The end is near, thanks to the information and motivation provided by you and Dave and some blessings from above.

    Thanks for everything!

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