There are a lot of terms and jargon thrown around by auto sales representatives when you are going through the car buying process which can be quite confusing for consumers to navigate.  One term that customers truly are confused about is the notion of NEGATIVE EQUITY.  Canada East Rides is here to explain what negative equity is, how you can find yourself in a position in which you have it, and what steps you can take to avoid it from happening to you.

What is Negative Equity?

It means that you have more owing on your current car loan than your vehicle is actually worth.   For example, let’s say you owe $10,000 on your current loan but your car is only appraised at $8,000.  That means you owe $2,000 more than your car is worth, or in other words, you have $2,000 in negative equity. This is never a good thing because you will pay more than the vehicle is worth to buy it out.

How Does Negative Equity Happen?

How to Avoid Negative Equity

Anytime you have more owing than your vehicle is worth it is costing you money, so it is important to do what you can to avoid it by: