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Negative equity and outstanding finance: Your options

  • So, you want to change your car, but you still have payments to make on your current agreement. What can you do? Do you still have to wait until all your payments have been paid?

    Well, no you don't. If you settle your loan early you may be entitled to a rebate of interest, so your settlement figure may be less than the sum of the remaining payments.

    We can settle any outstanding balance on your current finance agreement and then use any remaining credit from your part exchange as deposit for your new car. But what if you owe more on finance than your car is worth?

  • What is negative Equity?

    Negative equity is when you owe more on your current finance agreement than your car is worth. As an example, you may have a car that is worth £4,000 but your settlement figure is £6,000, so you have £2,000 negative equity.

  • How do you get into negative equity?

    All cars decrease in value, known as depreciation, and sometimes this can occur faster than you're repaying your finance agreement. This can happen during the first few months of ownership of your new car, especially if you've borrowed a large percentage of the cash price of your car, paid a high interest rate, or carried negative equity in to your finance agreement from a previous agreement.

  • Why is negative equity a problem?

    As long as you can afford the repayments then you shouldn't worry about negative equity. If your loan was specifically for the purchase of your car then payments will either be structured to pay off your debt over the course of the loan, or, if they have a balloon payment at the end, should be set less than the guaranteed minimum future value.

    However, if you find that you need to change your car whilst you still have negative equity then there are still options available to you.

  • What are my options?

    Negative equity can be resolved. Please speak to one of our customer advisors or send you details here and we will call to discuss your options.

I need to change my car and I have negative equity. What's my next step?

  • I need to change my car and I have negative equity. What are my next steps?

    Using our calculator below you can roughly value your part exchange along with entering your settlement, any deposit you have, the monthly payment you can afford and the period you want to repay the loan over. From there we can show you what cars fit your budget.