Upside Down Loans Refinancing

An upside-down car loan is where the outstanding balance on the loan is. to get out of that situation, from making extra payments to refinancing.

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You are upside-down on a car loan when you owe more than your.. took out the original loan, the refinancing would allow you to pay off the.

Refinancing an auto loan is typically done as a way to reduce payments and save money by securing a better interest rate than the one you currently have. While refinancing an upside-down car loan — a loan on a car that’s worth less than what you owe on it — is possible, it’s not always the smartest.

In a "normal" economy, refinancing an upside down mortgage loan would be nearly impossible. But there are now some government refinance programs There are certain situations where upside down homeowners simply cannot refinance. For example, if you have severely negative equity you.

Loan Modification Vs Refinance . homeowners who are at risk of defaulting on their mortgage or still owe far more on their loans than the properties are worth. The Home Affordable Modification Program and the Home Affordable.

With an upside-down loan, the collateral that secured the loan is worth less than the money owed on it. This is relatively common during the early years of car loans because cars depreciate so rapidly that it is easy to owe more on a car than it is worth.

The down side comes if your current vehicle has high mileage, or needs a lot of repairs. That means you might not get much value out of the vehicle. While none may be 100% ideal, there are other options besides refinancing if you are in an upside-down loan.

Unfortunately, the most common way to refinance an upside down car is to extend your loan term. For example, if your original car loan term was for 48 months, extending the loan to 60 months with a lower interest rate will lower your payment , and help bring down the principle balance you owe faster.

Best auto loans Refinance auto loans How to buy a car Total car cost calculator lease calculator compare new vs used car Should I refinance? When you owe more than your vehicle is worth, you are upside-down, or underwater, on your car loan. This doesn’t immediately spell trouble, but it can.