Do you know what negative equity is? It’s when the amount you owe on a vehicle is actually more than the current value of the vehicle. If a consumer decides to trade in their vehicle before the current loan is paid off, the debt from that previous loan could carry over to the new vehicle as part of the new trade deal. It is critical to ask the salesperson to outline any negative equity in all financing and purchasing documents.
Financing over a longer term may mean driving a more expensive vehicle, however it also means it will take longer to pay off that vehicle. All costs of owning a vehicle, including ongoing maintenance, insurance, fuel and depreciation should be considered before making a purchase.
AMVIC has free, helpful consumer guides that you can take with you when you go vehicle shopping that include a bill of sale checklist to ensure any negative equity is correctly listed.
Understand your consumer rights by visiting amvic.org.