What Do I Do About My Negative Equity?


Recently, I was talking with a woman about her 1999 Lexus RX300 and received the following question from her about selling her vehicle and eliminating the negative equity….

“John,I have had this car for about 6 mos. It is in good condition, could use tires and has some normal interior wear. I would like to get what I owe on the vehicle.

I’ll attach some photos and here is the VIN #.

Also, if I am able to sell the car for less than what I owe, are you able to finance the negative equity on top of the Subaru?


Tracychart success

There are millions of people driving vehicles today who owe more on the vehicles than they are worth. In fact, a recent study showed that as many as 37% of the people driving automobiles today are “upside down” on the vehicles they own. Personally, I think that figure is low and Tracy is obviously not alone in her situation.

In her case though, it’s always difficult to buy a vehicle and get out of it 6 months later for what you owe on it. Especially, if you paid retail for the vehicle to start with because all vehicles depreciate, especially SUV’s right now with gas prices approaching $3 a gallon. Time is what eliminates negative equity because every month that goes by you own more of the vehicle.

Tracy’s best bet is to find a buyer for her vehicle as close to what she owes on it as possible, but that’s not always easy because most people looking for used vehicles want a super deal. If they are buying from a “private party” they want to pay even less than what they would pay at a dealership.


One great option for people wanting to eliminate negative equity is to lease a new or pre-owned vehicle. The lease allows a person to get a lower payment, have a guaranteed buyer of their vehicle at the end of the lease period by staying within the lease terms, and potentially roll the negative equity into the leased vehicle.

I’m currently assisting a client that is coming out of a large truck with 45,000 miles that he is upside down on by $5,900. He’s getting a 2006 Chrysler with only 15,500 miles on it and at 15,000 miles a year he will have a lower payment than what he’s paying now by almost $150 a month! At the end of his lease, he gets to start over and the $5,900 will have disappeared.

My suggestion for Tracy is to get out from under her Lexus RX300 by rolling the negative equity into a new or near new vehicle. Lease it for 36 months to get a better vehicle, a lower payment and a guaranteed buyer at the end of the lease.
John Boyd

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

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