Smart Payment Plan Asks: Have You Ever Been Upside Down In Your Car?

To avoid being “upside down” in your car, you need to ensure that you own your car – instead of it owning you!

How can a car own you? The answer is simple: If you owe more on your car than the car is actually worth, that means you are “upside-down” in your auto loan, meaning you have negative equity in your car.

Al Krulick, writing on the Debt.orgwebsite, further explains the problem. Should you decide you want to sell your car, the price you get for it won’t cover the amount remaining on the loan you took to purchase it. Should you have the misfortune to be involved in an accident which causes such serious damage to the vehicle that it cannot be repaired, your insurance will only cover the worth of the car, not the total cost of the loan.

car loan

The unpalatable truth is that more and more people are finding themselves with car loans that leave them “upside down.” How can you avoid finding yourself in this position? According to the professionals at Smart Payment Plan, there are a number of sensible steps you can take which involve checking out all the available options in advance of your decision to buy.

  • Choose the shortest repayment plan you can afford.

This saves you money in interest over the life of the loan.

  • Make a down payment of at least 20 percent.

The average drop in value of a new car in its first year on the road is around 20 percent. If you don’t make a large down payment of at least 20 percent, you will start out with an upside-down loan.

  • Research the value of a used car before you buy it.

If you don’t, you could end up paying too much – a surefire way to get stuck in an upside- down loan.

  • Pay off a car loan before you sell the car.

If you are doing a trade-in using your old car, be careful to ensure that the dealer doesn’t simply roll over your debt to the new car. That means you would start off in a negative equity situation.

  • Consider leasing instead of buying.

If you know that you will only keep a car for two or three years, this is a good option and stops you from having any loan in the first place.


  • Choose the basic model of a new car.

If you decide there are some extras that you simply can’t live without, add their cost to your down payment.

Almost the only acceptable way to start off with an upside-down car loan is if you are certain in advance that you intend to keep the car for a long time. If you take a five year loan, but keep the car for ten years, you’ll end up with with positive equity in your vehicle. Outside of this option, how else can you get out of an upside-down car loan?

One way is to sell your car, but remember that you’ll get a better price from a private buyer than from a dealer. However, if you are too far in debt and can no longer pay your monthly bill for the auto loan, you should consider debt help options. Two of the most common options are debt consolidation and debt settlement. When you consolidate your debts, your car loan will be combined with some or all of your other debts in one large loan. The new loan usually comes with lower interest rates and better repayment options.


You may find that a matching debt payment plan, like Smart Payment Plan, is an effective and easy way to cut down on debt, in addition to increasing your equity. Among other benefits, Smart Payment Plan makes it possible for individuals to match payments to their payday. Helpful measures such as these will go a long way in ensuring that you will never find yourself “upside-down”.