Negative equity means the amount needed to settle finance is higher than the vehicle's current value. It can happen because cars often lose value faster than the agreement balance falls.
How it works
- Request a current settlement figure.
- Obtain realistic trade and private-sale valuations.
- Calculate the difference before choosing another car.
- Compare keeping the car, paying the shortfall or—where suitable—financing it.
What to check before you apply
- Whether changing the car is necessary now.
- Total borrowing if a shortfall is added to new finance.
- How long the new term lasts.
- Independent debt advice if repayments are difficult.
A realistic note
Rolling negative equity into new finance increases borrowing and may repeat the same problem. Do not focus only on the new monthly payment.
Frequently asked questions
Can I part-exchange a car in negative equity?
Possibly, but the shortfall must still be paid or financed.
Does voluntary termination remove negative equity?
It is a statutory right in some agreements with detailed conditions, not a general return option.
How do I get a settlement figure?
Ask your current lender; the quote is normally time-limited.
Important: We Do Car Finance is a credit-broking service operated by Sandhurst Associates Limited. We are not a lender. Finance is subject to status, affordability and lender criteria. Acceptance is never guaranteed.