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Are You “Upside Down” In Your Vehicle?
Being upside down in a vehicle, simply means, you owe more on your vehicle than it is worth. The number
of people upside down in vehicles has increased over the last 5 years. Over 40% of new vehicle buyers are
now upside down on their old vehicle loans.
Many experts blame this on reverse sticker shock. As a new vehicles incentives rise, the value of a used
car will decrease. Many new vehicles are being bought with as much as $6000.00 in factory/dealer
incentives.
The most important question is how much are you upside down in your vehicle? If you are $2000.00 upside
down in your vehicle, you should purchase a new vehicle with at least the same amount in rebates and
incentives to offset the negative equity. That is the best case scenario. If you owe more on your vehicle
than its value and the incentives combined, you have three choices:
1) Stay in your current vehicle until the value and incentives are equal to your vehicle loan.
2) If you have the extra money, pay off the difference between your current vehicles value plus
incentives/rebates and your vehicle loan.
3) Roll over the negative equity into your new vehicle loan. You should only do this if you plan on
keeping your new vehicle for a long time.
Other factors that contribute to being upside down in a vehicle
Low or no down payments- Today the average down payment on a new vehicle is just 5% and sometimes
buyers don’t want to put anything down. You should try to put down as much money down as possible.
Length of a vehicles loan term- Buyers are seeking the lowest possible payments by stretching out the
length of the vehicles loan. Today’s vehicle loans are often five, six and sometimes even seven years long.
Try to take the shortest term you can afford.
Depreciation of your vehicle- Recognize that your vehicle will depreciate rapidly. By purchasing a used
vehicle, you let the vehicles first owner take that big depreciation hit. You get the vehicle you want without
the added financial strain of being several thousand dollars upside down on your loan.
Peoria Bloomington Used Cars has helped many people who are upside down get back on their feet. We
can help you too. Complete our online credit application or call us at (309) 272-RIDE to get started.
Buy a vehicle you like and keep it. Being upside down in a vehicle can be big problem if you decide to exit
the loan early. So choose a vehicle that fits your driving needs and hang on to it. Never finance a car for
more months than you expect to own it. The lower you try to keep your monthly payments the less equity
you will have in your vehicle. It will catch up with you when you are ready to buy your next vehicle.
Peoria Bloomington Used Cars proudly serves those in the Peoria IL area including: Peoria, East Peoria,
Peoria Heights, Dunlap, Chillicothe, Lacon, Metamora, Washington, Morton, Pekin, Edwards, Kickapoo,
Alta, Brimfield, Eureka, Canton, Hanna City, Washburn, Roanoke, Spring Bay, Rome, South Rome,
Farmington, Marquette Heights, Deer Creek, Congerville and other Central Illinois Cities.
Being upside down in a vehicle, simply means, you owe more on your vehicle than it is worth. The number
of people upside down in vehicles has increased over the last 5 years. Over 40% of new vehicle buyers are
now upside down on their old vehicle loans.
Many experts blame this on reverse sticker shock. As a new vehicles incentives rise, the value of a used
car will decrease. Many new vehicles are being bought with as much as $6000.00 in factory/dealer
incentives.
The most important question is how much are you upside down in your vehicle? If you are $2000.00 upside
down in your vehicle, you should purchase a new vehicle with at least the same amount in rebates and
incentives to offset the negative equity. That is the best case scenario. If you owe more on your vehicle
than its value and the incentives combined, you have three choices:
1) Stay in your current vehicle until the value and incentives are equal to your vehicle loan.
2) If you have the extra money, pay off the difference between your current vehicles value plus
incentives/rebates and your vehicle loan.
3) Roll over the negative equity into your new vehicle loan. You should only do this if you plan on
keeping your new vehicle for a long time.
Other factors that contribute to being upside down in a vehicle
Low or no down payments- Today the average down payment on a new vehicle is just 5% and sometimes
buyers don’t want to put anything down. You should try to put down as much money down as possible.
Length of a vehicles loan term- Buyers are seeking the lowest possible payments by stretching out the
length of the vehicles loan. Today’s vehicle loans are often five, six and sometimes even seven years long.
Try to take the shortest term you can afford.
Depreciation of your vehicle- Recognize that your vehicle will depreciate rapidly. By purchasing a used
vehicle, you let the vehicles first owner take that big depreciation hit. You get the vehicle you want without
the added financial strain of being several thousand dollars upside down on your loan.
Peoria Bloomington Used Cars has helped many people who are upside down get back on their feet. We
can help you too. Complete our online credit application or call us at (309) 272-RIDE to get started.
Buy a vehicle you like and keep it. Being upside down in a vehicle can be big problem if you decide to exit
the loan early. So choose a vehicle that fits your driving needs and hang on to it. Never finance a car for
more months than you expect to own it. The lower you try to keep your monthly payments the less equity
you will have in your vehicle. It will catch up with you when you are ready to buy your next vehicle.
Peoria Bloomington Used Cars proudly serves those in the Peoria IL area including: Peoria, East Peoria,
Peoria Heights, Dunlap, Chillicothe, Lacon, Metamora, Washington, Morton, Pekin, Edwards, Kickapoo,
Alta, Brimfield, Eureka, Canton, Hanna City, Washburn, Roanoke, Spring Bay, Rome, South Rome,
Farmington, Marquette Heights, Deer Creek, Congerville and other Central Illinois Cities.