What to Do When You Are Upside Down in a Car Loan - OpenRoad Lending

What to Do When You Are Upside Down in a Car Loan

With consumers looking to trade every few years, it is no wonder why we cannot build any equity in the cars we drive. Refinancing an upside down car loan can help you build equity faster and get out of that upside down car loan. Everyone wants to get to pay off their car loan and now it is easier than ever. Dealers are known for signing you up to a finance contract with an Annual Percentage Rate (APR) that is much higher than average. Most consumers do not realize this or that the finance process at the dealership is where they make the most profit off the sale. Not only are we struggling to get ahead financially, but we cannot do anything with our car because we owe more on it than it is worth.

As you may or may not know, interest rates have been dropping like a rock so there is really no better time to look for refinance options. You should start by pulling out your old finance contract and review those terms (interest rate, number of payments, etc). You will want this information handy when you begin talking to a lender. Here are a few things to consider:

Lower Your Payments – the most obvious reason to refinance is to lower your monthly payments. This can be done many different ways but the most common would be to get a lower interest rate than what you are paying now or extend the term of your loan. There are many online lenders today that give you the opportunity to apply and refinance your existing loan.

Build Equity Faster – when you refinance a car you have several options related to the terms of the loan to consider. Do I stretch out the term and dramatically lower my payments? Do I shorten the term which will raise my payment but allow me to pay the car off sooner and help me get some equity faster?

Get a Better Rate – there is a good chance, regardless of your credit, you can qualify today for a lower interest rate the only exception being if you financed with the manufacture and received one of their special financing offers like 0%. One of the best ways to lower your interest rate is to improve your credit score.

Is there really a savings to be had?

That answer is going to depend on several factors such as how much did you originally finance, what was the length of time you had to repay it and what is your current interest rate. We have seen customers save as much as $100 plus per month on the same exact car, just a different lender with better terms. They key for you is by refinancing an upside down car loan, you can turn those tables around and begin to build equity in the car you drive.


Refinancing a car loan is very easy and only takes a few minutes to complete. There are a lot of reasons to spend the time researching auto refinance options. Just a few are listed above. In the end, it takes you going online and completing the process. It could save you a lot of money over the life of your loan and help you get out of your upside down car loan. The little bit of time it will take will be well worth it.

Skip to content