Understanding Negative Equity in Peachland

Do you owe more on your vehicle than it’s worth? Are you wondering if you can still trade it in for a newer ride? You’ve come to the right place. At Bannister Ford Penticton, we offer BC shoppers our Easy Deal program, which simplifies the car buying experience and takes the mystery out of auto financing.

What is Negative Equity?

Negative equity occurs when the value of the vehicle falls below the outstanding balance on the loan used to purchase the car or truck. This is also referred to as being “upside-down” on the vehicle.

When faced with a negative equity situation, you have a few options:

1. Roll the remaining balance into a new car loan. Just keep in mind that this may increase your loan amount, which will cost more interest over the length of your term. You also need to be careful that you don’t borrow more than the vehicle is worth or you’ll be upside down again.

2. Find a way to pay the difference between your trade-in value and the remaining balance. If you don’t have the extra cash on hand, find ways to boost your income. You’ll qualify for a lower loan amount, which will save you money over the course of your term.

3. Hit the pause button. If you owe a large amount on your current vehicle, sometimes it’s best to delay your trade-in by a few months. You’ll have more time to pay down the balance to avoid negative equity.

Want to explore your auto financing options? Our Easy Deal program provides free online credit approvals for a fast decision. Contact our team at Bannister Ford Penticton in Penticton, BC, to learn more.