How To Sell a Car With Negative Equity

Call us now (855) 547-1550
or email us to

Receive a guaranteed highest price quote for your junk car from the best junk car buyer by filling out the form online.

We’re open Mon-Fri: 8 am - 8 pm, Sat: 8 am - 3 pm
Edgar Moulton.


Edgar Moulton. Car Expert

If your car is worth more than the outstanding amount of the loan, you have what is called positive equity, and you are in a good position. But what if the value of your auto is less than the debt you still have to pay for it? How can you sell a vehicle with negative equity?

Let’s say right away that you can trade in a car that is not paid off. In this article, we will cover all the issues that may be of interest to car owners with negative equity loans. Keep reading to find out the answers to all your questions about trading a car with negative equity.

What is Negative Equity on a Car?

Negative equity on a car is when the car owner owes more money on loan than the vehicle is worth — if the automobile is valued at $15,000, but you own $19,000 on the car, then negative equity is $4,000. This is also called an upside-down car loan.

Among the common reasons why cars go down in value and vehicle owners face negative equity car loans are: not investing enough money in the purchased vehicle, heavy wear and tear on the car caused by overuse or neglect, long-term car loans (for 6-7 years), and others.

How Do You Calculate Negative Equity?

So, the situation when the car loan balance exceeds the current market value of the car is a pretty common phenomenon with vehicles. To determine if you have negative equity, you should just subtract the amount of car loan debt from the current market value of a similar vehicle. If the resulting number is negative, you have negative equity.

So, what do you need to assess how much negative equity you have? The first and foremost thing you need to know before calculating negative equity is the two key pieces of information about your loan and your vehicle — the estimated value of the car and the outstanding balance of the car loan.

In addition, owners of automobiles with negative equities can get an accurate estimate of the car cost by using special tools to calculate the vehicle's price automatically. As a rule, on such services, you only have to enter basic data about the car, such as the year of manufacture, make, model, and mileage.

Selling with Negative Equity

Most people are not affected or even familiar with negative equity until they make the decision to sell or trade in their car. In general, selling an automobile with a negative equity car loan is possible and not even difficult, but it requires additional steps and can take more time and effort. So, even if you are dealing with negative equity, you still have a lot of ways and various options for selling the car and paying the loan debt in full.

How to sell a vehicle with a loan? Consider the most common options available and choose the right solution for your current financial situation.

Transfer of Negative Equity into a New Car Loan

When you exchange or buy a new vehicle, the dealers will take care of your loan. Although it sounds great, this method is not a good solution if you want to sell a car with negative equity and profit from it.

How does it work? If you roll over negative equity into a new automobile loan, the dealer pays your lender the rest of your loan. And you should be prepared that they will either add this amount to your new loan or deduct it from your initial payment. The most dangerous thing about this method is that you are actually starting one more loan with negative equity. This exposes you to a significant risk of being in the same situation again and falling into a hopeless vicious circle.

Transfer of Negative Equity into a New Car Lease

This method is only suitable for those who want to rent the next car. The best thing about this option is that once the lease expires, you are not forced to continue paying negative equity debt. However, be prepared for the fact that you will probably pay more for rent. This option is much less dangerous and risky than rolling over the negative equity into a new auto loan because you don't have to worry about going into a deep debt hole.

Covering the Difference out of Pocket

If your budget and financial situation allow it, then definitely the best solution is to repay the loan and completely get rid of negative equity. This option frees you from debt rather than simply transferring it to a new loan. To pay off the negative equity, you must repay the difference between the unpaid rest of the loan and the appraised value of your automobile.

Selling a Vehicle in a Private Way

This way of negative equity car trade-in is definitely not the easiest, but still the most profitable one. In some situations, selling to a private buyer can provide a benefit of thousands of dollars. This means that a private sale of a vehicle at an inflated price will allow you to earn and pay off your negative equity.

Keeping the Car and Postponing the Sale

In practice, postponing the sale is one of the best ways of trading in a vehicle with negative equity. If you choose to wait until the loan is paid off in full, you can use previous payments as an initial payment on a new car.

This method to trade in a car with negative equity is definitely not suitable for those for whom the urgent purchase of a new vehicle is critical or whose automobile needs serious repairs. You should weigh the price of necessary repairs against the financial benefits of not selling your old auto.

Consider JunkCarsUs Your Trusted Partner

We at JunkCarsUs have been buying automobiles in any condition and on different terms for over 30 years. Our experienced and advanced company offers a customer-focused service and favorable conditions for cooperation in any situation. Whether you are interested in how to sell a car with a loan on advantageous terms or want to sell your damaged car and get cash for junk RVs, we are ready to help.

We provide the most profitable offers on the market, high standards, customer service satisfaction, same-day service, no paperwork, free pickup, and best price guarantee. Save your time, nerves, and money with JunkCarsUs.

If you are wondering how to sell a car with negative equity quickly, simply, and profitably, reach out to our managers and discuss mutually beneficial terms. We guarantee that your vehicle will be valued at the best price.


Can I sell a car that has negative equity?

Yes, you can. Selling a car with negative equity is possible, and there are several options available:
  • transfer of negative equity into a new car loan
  • transfer of negative equity into a new car lease 
  • covering the difference out of pocket
  • selling a vehicle in a private way
  • keeping the car and postponing the sale

Can I sell a car with a loan?

Selling a car with a loan is not difficult, but the main requirement is that the loan must be fully paid off before you can transfer ownership to a new person.

Will selling a car with a loan hurt my credit?

Paying off a car loan before the deadline set by the contract can negatively affect your credit score in one way or another, but this negative impact is temporary. In addition, your car loan may have a prepayment penalty.

How can I get rid of negative equity on my car?

To get rid of negative equity on your vehicle, you can pay it off straight away, out of your own pocket.

Will JunkCarsUs buy a car with negative equity?

Yes, we will. JunkCarsUs specializes in buying vehicles in various conditions and on different terms. Contact us to find out more.

Edgar Moulton.


Edgar Moulton. Car Expert

Rate this article:

5.00 out of 5 based on 1 votes

Write us

Contact Us

Feel free to contact us for any business, media, or personal inquiries:

Book Online

Please, submit your quote request form and we will get back to you in a minutes with our guaranted cash offer!

Enter your phone number *
Enter your email
City *
Zip code
Condition Of The Vehicle

We never share your information or spam you with our own emails or promos!