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New cars depreciate by nearly a quarter of their value within the first year of ownership. If your down-payment was small, owing more on your car than it’s worth is a realistic possibility. This is what it means to have an “upside down car.” For example, this is what it would look like if you’re upside down on your car:

$15,000 (auto loan) - $8,000 (what the car is worth) = $7,000 (amount upside down on loan)

Paying the amount of an upside down loan can be quite the predicament, especially since you won’t even benefit from driving the car anymore. How does one even end up “upside down?”

  • Too small of a down payment
  • A loan interest rate that is too high
  • You car is too expensive and straining your budget

Sometimes, you’re put in a situation where you now have to sell that upside down car. Whether it’s been totaled in an accident or you’re just looking to trade it in, it is a good idea to know your options regarding your upside down car.

Selling My Upside Down Car

Papers Needed to Sell a Car

The first and most important document involved in any car sale is going to be the title. When selling a car to get the most money, having the title is crucial. It’s the same for every state. Every time you’re selling a car, the title transfer should be the first order of business. That’s because signing over the title is the quickest way to be 100% certain you won’t be liable for the car after it’s sold.

If you don’t have a vehicle’s title, just check with your local DMV’s website about how to get a replacement. At the very most it will cost a few dollars and take a few days of waiting, but selling with a title ensures you’re always going to be in the clear.

Actual Cash Value

Your next step is to get a valuation for your upside down car. Your actual cash value can be reached by subtracting the depreciation (“wear and tear” costs) of the car from the replacement value after the car’s purchase.

There are several means by which you can get your vehicle's value, but once you do that, take the number to a few different car businesses but don’t share it with them. Play them against each other, because they will compete for your business with their offers.


Our expert evaluators can help you get an accurate estimate for your car's value, FAST!

How to Trade-In an Upside Down Car

What is Required to Sell a Car

Trading in an upside down car can be a little difficult to navigate. Once you’ve found the value of your negative equity from your lender, the next step is deciding which course of action to take.

  1. Delay the Trade-In: This is typically the best option from a financial perspective. You can hold off on the trade-in until you’ve saved up enough money to pay off the loan or pay extra on the loan until you’re no longer upside down. This is only feasible if you can also hold off on getting a new car.
  2. Pay Off the Negative Equity: If you can’t hold off on getting a new car, this is an option. You can off your negative equity all at once and get yourself out from being upside down.
  3. Roll the Negative Equity into Your New Car Loan: The option exists to roll whatever you already owe into your new car loan. While this is a quick way of getting things done, it can put you at greater risk of being upside down on your new car. You’d have to weigh convenience vs risk for yourself before making this play.

Ultimately, you have to figure out which route is the best for you to take when getting your upside down car off your hands. Now, all of this can be an incredible hassle. Fortunately, there’s a solution for that as well.

What If I Totaled My Upside Down Car?

Totaling a car you’re still upside down on presents its own particular set of issues. Having to pay thousands of dollars for a vehicle you can no longer operate is never an appealing idea to anyone. Fortunately, there are options available for you in this type of situation:

Keep The Totaled Car- Insurance companies will offer you a pay out for your totaled vehicle. However, this amount can be lower than what you could get for the vehicle if you were to sell it yourself. Opt to keep the car and search for junkyards, salvage yards, and private buyers willing to purchase it.

Part It Out - You may find that you can net a higher profit from your car than you would from an insurance pay out. It probably won’t be enough to get you out of negative equity, but it may put a dent in the amount you have left outstanding.

Private Buyers - You may be able to find a private buyer willing to purchase your totaled vehicle for a fair price. It’s worth noting, many of these buyers will be hobbyists looking to get you to sell the vehicle for as cheaply as they possibly can.

Junk It; Scrap It - Find a junk or scrap yard in your local area to take the totaled car off your hands. There may be some tow and title fees involved, which would bite into the profits you could direct towards paying off your loan.

CarBrain: The Best Way to Sell Your Upside Down Car

The paperwork for selling your old car can be pretty easy—but it’s never as easy as selling your car with CarBrain.

That’s because we can get you a guaranteed, no-obligation offer in less than two minutes. There’s no pressure so you’re free to shop around. Then when you decide to lock in your offer, we’ll send out a tow truck to pick up your vehicle and put payment in your hand within 24-48 hours.

We will make an offer on just about any car, from totaled vehicles and salvage to broken-down cars that won’t even run anymore. We also tow for FREE from practically anywhere in the continental United States. Get your guaranteed offer today!

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Frequently Asked Questions

Will A Bank Refinance A Car That Is Upside Down?

Possibly. Refinancing your upside down car loan is definitely one of your best options for getting it right side up. However, not all banks are willing to do so. Local banks and local credit unions are likely your best bet for such a refinance.

How Do I Get Out Of An Upside Down Auto Loan?

You have a couple of options to get out of an upside-down loan: you can ride out the duration of the auto loan, you can transfer is to a line of credit, or you can attempt to refinance the auto loan.

Sometimes it makes sense to get an offer from a buyer like CarBrain, calculate the difference between the offer and what's left on the loan, and see if you can cover the difference to sell it.

For instance, if you owe $2,000 on a vehicle and CarBrain will make an offer of $1,000 for it, consider paying down $1,000 on the loan and then selling it for the remaining $1,000. This will get you out of the loan faster and enable you to wipe the slate clean with a newer vehicle, if any.

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