Negative equity
When you owe more on your car loan than the car is worth. It is common early in a loan or with long terms and no deposit.
Negative equity means the balance left on your loan is higher than the car's current value. If you owe 15,000 dollars but the car is worth 11,000, you are 4,000 in negative equity. It is sometimes called being upside down on the loan.
It happens because cars lose value quickly, especially in the first year or two, while the loan balance drops more slowly. Long loan terms, no deposit, and high interest all make it more likely.
Negative equity matters if you want to sell or trade the car, or if it is written off, because you would still owe the shortfall. It can also make refinancing harder.
You can reduce the risk with a deposit, a sensible term, and a car that holds its value. We help you find a loan that fits. Get your fair rate.
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