Oh no, I'm upside down!

If you owe more money on your car than someone will pay for it you are "upside down" on your loan. My best advice to you would be to wait to buy a new vehicle until you can get right side up. If you trade-in when you are upside down, instead of receiving money for your trade-in, you will owe additional money. If you don't have any other resources you will have to add that amount to your new loan, which puts you further upside down and perpetuates the problem. If you are upside down on a loan you are in a precarious position. If something were to happen to you, you were no longer able to make your payments and had to sell you would actually have to pay someone to take the vehicle off your hands. Where would you get this money? Also, the more debt you carry on your loan the more interest you are going to pay. A safe guideline is if you can't afford to put at least 20% down on your car then you need to buy something less expensive. You may be able to make up the gap and get right side up if you sell your car privately to an individual.

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