SERIES: Sell Car With Negative Equity – Part 2

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

Equity is determined by the following equation:

Vehicle Actual Value – Vehicle Loan Balance = Equity

If the Equity number is negative, then that means that the vehicle has negative equity.

As you prepare to sell your car, it is very important to know the actual value of the car and the actual amount owed.

I emphasize the word ACTUAL because most people tend to overestimate their car's value and underestimate what they still owe.

How does one determine how much their car is actually worth?  Obtain a quote from Kelley Blue Book and Edmunds.  You will need to know the year and make of your vehicle including your engine type and mileage.  These two sites will provide you a general idea of what used cars like yours are selling for in your area.  Recognize that these are average selling prices.  That means that cars are selling above and below that number, but this is the price that one can expect to sell the vehicle.

Now that you know the actual value of the vehicle, it is time to determine exactly what is owed.  Contact your lender and obtain the actual pay-off balance of the car loan.

Now, use the equity calculation to determine your vehicle's equity.  If it is negative, then you have a car that is known as "upside down".  It has negative equity.  You owe more than it is worth.

In the next part of this series, we will discuss ways to sell the car even with negative equity.

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

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  1. Caryn on September 16, 2008 at 7:12 pm

    Wow no comments yet on this series?? We just did this very thing this past weekend! Sold our truck for $1500 less than our loan payoff. Fortunately we had savings and were able to do this without putting any strain on the current budget. Was it painful? A tiny bit…but the relief we felt immediately after handing over the keys was amazing and worth it all! Just like that, $12000 of debt was erased for us! We are so, so much closer to debt freedom now we can almost touch it!

    Can’t wait to read the rest of this series, thanks Joe!

  2. Todd Helmkamp on September 17, 2008 at 10:05 am

    Hey Joe,

    This is a great series, but I would caution people about relying on Kelly Blue Book or Edmund’s. I work for a GM dealership, and those sites can often be off by literally thousands of dollars! The best way to get an idea of your car’s approximate retail value is to go to Do a search for your car’s make, model, and year in a 25-mile radius, and compare prices (make sure you take into account differences in mileage and equipment). That will give you a much more accurate estimate of what it’s worth in your area.

  3. Greg on September 18, 2008 at 4:33 am

    I’ve always heard that using is more akin to the black book values that car dealerships use. I also like what Todd said about; that way you can competitively price your vehicle. On the other hand, it probably can’t hurt to check all these sources mentioned when trying to formulate a selling price.

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