Upside Down in a Car

Dear Miss Mota,

What does it mean that I'm upside down on my car once I purchase it? What about on my trade in?
Susanne, CO

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Dear Baffled in Boulder,

Being upside down isn’t always a bad experience. Just think of it like you are hanging from your knees on the monkey bars for the first time. It is scary but just breathe, darling, we all go through it.

From the moment that you drive your freshly financed dream on wheels off the lot, you have started losing some money and are technically upside down. Your total negotiated price isn’t just what you agreed upon with the salesman because you also have 48+ months of interest to pay. You can always pay it off early if you have a sudden influx of cash but what the bank says your car is worth in payoff may not be the same as the going market rate for that car so be prepared. On the other hand, you could end up ahead if you chose a great car!

Upside down with a trade-in is different. If you are trading in a car and you still owe money on it, someone will have to pay the lender for the difference and as the dealer is taking the car, they will pay it but not out of the goodness of their heart! They will wrap what you owed into the price of your new car and if you are financing with the new one, you will still be paying for that old thing you thought that the dealer kindly took off your hands.

Just being aware can alleviate a lot of the hyperventilation when dealing with cars and doing your research regularly can give you the confidence to play chicken.

Truthfully,

M

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