I wrote about being “upside-down” a little while ago, and I think it’s time to revisit that topic. For those of you scratching your heads, “upside-down” means you owe more on the car than it is worth”. This can be particularly frustrating for people looking to buy a new car. If you owe more on your car now than it’s worth, the remaining debt gets wrapped into your new car purchase. Increasing the cost of your new car, but not necessarily the value.
This can be a vicious cycle for a lot of people. How do you stop it? Here are some ways to get out from under being upside-down:
Consider your automotive purchases more carefully in the first place. Look into the “residual,” which is the projected, future resale value. Even though they may cost more up front, vehicles with higher residuals are less expensive to own in the long-term because they depreciate less. Purchase mainstream vehicles. A higher trim level four-door sedan in a fairly common color will hold onto its value more than a lime green sport model with excessive customization. Unless you find a buyer whose taste in personalization is exactly like yours.
Resist the urge to keep buying new cars on a regular basis. Take care of what you have and hang onto it. Pay it off. If you’ve taken care of it, then it will bring more money when you sell it or trade it in. And if you’ve paid it off, you will then have some positive, rather than negative, equity. Spend a little time and money cleaning it up and ready for sale, but you’ll get more in the bargain. Fixing it up and spending a few Saturdays waiting by the phone can result in several thousand dollars in your pocket. If you don’t want the hassle, the dealership will be more than happy to take it in trade and make some good money on it.
Here’s an in-depth explanation on being “Upside Down”.
Also check www.united-credit.org for extra help.
Thanks to automedia.com
If you have any questions about your car finances, don’t hesitate to give your Dallas Fort Worth Buick GMC dealer, Freeman Grapevine a call. We can try to get you out of that “upside down” situation.