Negative Equity in Vehicle Finance
Understanding It And Your Options
Car finance is a great way to drive home your dream car while paying in manageable amounts. But it can also be confusing, with lots of acronyms and terms to get your head around. If you’ve heard the phrase ‘negative equity’ and are worried about what it means for you, we’re here to keep you in the know!
“What does negative equity mean in car finance?” “What are my options if I have negative equity?” “Is it possible to get car finance with negative equity?” Well, we’ve tried to answer these for you below! And don’t hesitate to contact us and one of our friendly team members will try and help.
What is negative equity?
Cars start losing their value the moment you drive them off the forecourt. If you’ve financed your vehicle, there might be a situation where its value is dropping quicker than you’re paying off the loan. This is where negative equity comes in – it’s when you owe more on your car than the current value of the car.
The term may sound intimidating, but many people face negative equity at some point, and it doesn’t have to hold you back from getting the new car you want. By understanding your options, you can effectively manage negative equity and avoid potential financial strain.
Can you get car finance with negative equity?
Negative equity can complicate things if you want to sell, trade in or refinance the vehicle. Some lenders may still let you finance a new car if you have negative equity on your existing one, but this very much depends on factors like your financial situation, the affordability checks and the lender’s policies.
If you’re unsure how to navigate negative equity, speak to a Perrys team who will be happy to help!
How can you clear negative equity?
Having a poor credit rating can feel like a hurdle when searching for car finance and finding it tough to get accepted, but there are practical steps you can take to improve things.
Have you got questions about vehicle finance?
Then we can help! Whether you are in a position of negative equity on your current vehicle, have credit issues and are struggling to know if you can purchase a new vehicle or wnany to understand a little more about the different finance options available to you on a replacement vehicle then we are on hand to help. Complete the form and we will be in touch as soon as we can!