Tag Archives: Negative Equity

Consumers who want to trade in their vehicle and who own more than what their vehicle is worth or what the dealership will actually give you for your vehicle most often become the victim of the negative equity scam. Usually if you have negative equity the dealership will try to add the negative equity into your new auto loan. When this scam happens you are paying taxes on the entire auto loan. Thus you are actually paying double the taxes on your trade in! The best way to avoid negative equity scam is by keeping your car for the entire loan term. If you believe you have been a …

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Sometimes when consumers purchase new vehicles they discover that they are “upside down” on loans for vehicles which they wish to trade in. In situations like this, dealerships are required to disclose how the negative equity is calculated on the face of the Retail Installment Sale Contract or Motor Vehicle Lease Agreement. Most of the time you can accomplish this disclosure if you properly complete the section of the contract, which is entitled “Itemization of the Amount Financed.” In this section you can find line items which refer to the agreed trade in value, “prior credit or lease balance” and “net trade-in.” In case you think that these items …

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The amount paid by the customer that covers a significant part of the actual cost of the vehicle is called down payment. This amount is deducted from the actual cost and loan is taken to pay the remaining cost. Interest rates on such loans are greatly influenced by the down payment. However, the decision about how much down payment should be made when you purchase a car should be very wise. The expected down payment of the car should be at least 20 percent of the vehicle cost. This strategy is quite beneficial as it ensures that the buyer is not “upside down”, meaning that the buyer is not …

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GAP Insurance is also known to the public as GAP Waiver or GAP Addendum. It is an abbreviation for Guaranteed Asset Protection. In case your insurance company declares your vehicle a total loss from accident or theft GAP Insurance will pay the difference between the ACV (Actual Cash Value) your insurance company determines they will pay and what is owed to the bank on your vehicle. An easier way to explain this is that GAP Insurance will pay your negative equity (difference between your vehicles ACV and what is owed to the bank) so that you are not responsible to pay the bank, potentially thousands of dollars, on a …

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Currently most consumers are ready to get longer-term auto financing car loans (48, 60 or even 72 months). This usually means that it will take longer to get into an equity position with your vehicle. Of course even if you get into a negative-equity situation with your car loan, it won’t necessarily affect your overall credit score. However it could affect your purchasing power and it could impact the auto loan rate you get for your next loan. Extended-term financing could be a good option for those consumers who like to keep vehicles for extended period. If you’re a consumer who likes to purchase a new vehicle on a …

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In vehicular terms being upside down in your car is a financial problem. In car dealership slang, it simply means that at the end of your auto loan, you still owe more money to your car financing organization than the vehicle is now worth. For example if you buy a $30,000 car with $2,500 down, finance it over a common 60-month term, but in three years you decide you want to sell it. Your payoff on the auto loan is $18,000, but your car is only worth $15,000 at this time. This means you are $3,000 upside-down, because in order to pay off your original auto loan, you would …

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Car dealers are aware that most of their customers buy cars based on price, but people also consider their budgets. That’s why when you go to the dealership to shop for a new car the dealer tries to focus the conversation not at the price of the car but the monthly payment you can afford. The car dealer will typically start with a monthly payment that is two or three times what you told him you could afford. They can expect that you will be shocked when you learn that the payment is higher than you thought you would pay. They usually figure that as your monthly payment goes …

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Often car dealers tell consumers that their trade-in vehicle is worth less than it really is and a lot less than customers think it is. What’s even worse sometimes they fail to inform the customer that the car has a so called “negative equity“. Negative equity is the term most car dealers use to explain why your car wasn’t worth what you owed on it when you wanted to trade it in. “Upside down” or “in the bucket” are similar terms that car dealers use to trick car buyers in order to literally steal the trade-in vehicle. This happens when the dealer takes the car as trade-in but later …

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This fraud occurs in a transaction that includes a trade-in vehicle when more is owed on the trade-in vehicle than the actual cash value of the vehicle. Car dealer makes the customer believe that the dealership is valuing the trade-in vehicle at the amount owed and makes sure the customer won’t owe anything on the trade-in. However, later the customer finds out that the value the dealership paid for the trade-in is less than the amount owed. The difference is added to the cash price of the new vehicle, which is called the capitalization costs of a leased vehicle. Thus, by inflating the cash price or cap costs of …

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Below is a list of auto dealer activities which may signal possible auto fraud in your automobile purchase or lease transaction of a vehicle in California. Switching the consumer from a sale to a lease without full disclosure The sale of a vehicle which was previously repurchased from a prior owner as a lemon without full disclosure to the consumer The sale of a vehicle that was previously salvaged as a total wreck without full disclosure to the consumer The sale of the trade-in vehicle and then later undoing the transaction Failing to provide the consumer with a written contract in the language in which the consumer negotiated the …

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