If you put ten people who have bought a new car in the last couple years in a room, chances are that four of them are upside-down on their car loans.
An upside-down car loan is the less onerous euphemism for saying that they owe more on their car than they could ever get if they sold it or traded it in. Is this a bad thing? And if you are one of the four upside-downers what, if anything, can you do about it?
Owing more on your car that it is worth is not necessarily a bad thing if you intend to keep the car until its paid off, and you have the auto insurance coverage to satisfy the loan if the car gets totaled in an accident. Doing nothing is always an option.
If you are looking to replace the car then you have to do something to close the gap in the unpaid balance of your current loan and the cars resale value, or be prepared to eat the difference and go even deeper upside-down on your next car purchase.
Some new car lenders will add the amount of the unpaid principal on your old loan to the principal amount on your new car loan. In effect you would be paying that much more for your new car, or still paying for the old car you no longer own, which...
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