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Think before you buy

Many of you have experience of selling your car at a lower rate in an exchange with new cars. Most of the time car owners sell it for loss or negative equity.

What is negative equity?

Negative equity means that the market value of your car or house or assets is less than the amount that you still owe on your debts. So if you’re in negative equity and you sell your car, you’re still going to owe money to your loan lender.

For example, you want to trade in your car for a newer model. Your loan payoff is €18,000, but your car is worth €15,000. You have negative equity of €3,000, which must be paid if you want to trade-in your vehicle. If the dealer promises to pay off this €3,000, it should not be included in your new loan. Nevertheless, some dealers add the €3,000 to the loan for your new car, deduct the amount from your down payment, or do both. In either case, this would increase your monthly payments: not only would the €3,000 be added to the principal, and you add more loans.


Think twice before you sell or trade your car, never trade it for negative equity. Consider paying down your loans fast, if you still want to trade it then try getting more of it than too lower value. When you buy a new purchase take a lesser length of the payback period. It is good to keep a shorter time frame for the loan because your financial situations can change in a couple of years, for example, you lose your job, divorce or hospital expenses, etc. In addition, your default on loan will hit your credit score, making it harder to borrow money in the future or try to manage your way out of the problem. It’s a downward spiral that can easily end up in bankruptcy.

Before jump take decision thinks twice and makes wiser decisions.

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