Finance Focus: What Is Negative Equity On An Auto Loan?
Depending on the state of the market, some car owners can end up with negative equity on their auto loans, which means the current value of their vehicle is less than what they owe to their car loan. This isn’t an ideal situation to be in, but due to many factors (often out of your control), it does happen, and it can feel like a black cloud looming over your finances, credit score, and life.
A common way to get out of negative equity is to trade in your current vehicle for a leased vehicle. This not only gets you out of the red on your investment, but it also helps rebuild credit as you make manageable monthly payments. It’s just another reason more drivers are putting their trust in the stability and flexibility of leasing their vehicles.