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Understanding and Overcoming Negative Equity (Part 2)

Following from Part 1 of a two-part series on Negative Equity, below we review some solid strategies to overcome the tough situation. For an overview of what negative equity is and how to calculate it, check out Part 1 using the above link before continuing here.

Strategies to Overcome Negative Equity

  • Assess your financial situation. Begin by understanding the full extent of your negative equity. Calculate the difference between the outstanding loan balance and the market value of your vehicle. This assessment will provide clarity on your financial standing and help you develop a plan to address the negative equity.
  • Accelerate loan payments. Consider increasing your monthly payments to pay down the loan balance more quickly. This approach helps you catch up to the depreciating value of the vehicle, reducing the negative equity over time.
  • Make additional payments. Whenever possible, make extra payments towards your loan principal. By doing so, you can reduce the outstanding balance and close the gap between the loan amount and the vehicle’s market value.
  • Refinance or renegotiate the loan. Explore the possibility of refinancing your current loan to obtain more favorable terms. Lower interest rates or extending the loan term can help manage monthly payments and facilitate faster repayment.
  • Optimize your vehicle’s value. Take steps to preserve or improve your vehicle’s value. Regular maintenance, timely repairs, and keeping mileage in check can slow down depreciation and improve its market value over time.
  • Seek professional advice. If you’re struggling to navigate the negative equity on your own, consider consulting a professional. We can provide personalized guidance based on your specific circumstances and help you develop a customized plan.


While negative equity may present challenges, it’s crucial to maintain a positive outlook and take proactive steps towards financial recovery. By understanding the causes of negative equity, acknowledging its impact, and implementing strategies to address the issue, owners can gradually overcome negative equity and regain control of their financial well-being. Remember, setbacks can be turned into opportunities for growth, and with persistence and careful planning, you can emerge from negative equity stronger and more financially empowered.

Pro Tip: Remember, the fastest and most straightforward way to overcome negative equity is with a down payment.

In the next post, we cover the importance and benefits of a Down Payment, as well as make suggestions of how much buyers should set aside. Click Next to continue.