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How to Get Rid of a Car with Negative Equity

Lease End

Adam Broud

Published 6/17/25

Leasing
Estimated Read Time: 7 minutes
TL;DR: If you owe more on your car than it’s worth (aka negative equity), you’ve got options—some better than others. From refinancing to lease buyouts to private sales, we break down seven strategies that can help you ditch the debt and reclaim your financial sanity.
Negative equity is the financial equivalent of quicksand—you’re stuck, and every monthly payment feels like sinking deeper.
But guess what? You’re not alone. According to Edmunds, nearly 40% of financed vehicles are upside-down, meaning people owe more than their car is worth. It happens. And the good news? There are several smart ways to get back on solid ground.
Let’s break down your best bets for getting out from under a car with negative equity—without torching your credit or losing your shirt.

1. Refinance Your Loan

If your current interest rate is sky-high, refinancing could be your ticket to freedom. By securing a lower rate, you could reduce your monthly payment and send more money toward your principal, not just interest.
Why it works:
  • A lower APR = less interest = more equity, faster.
  • You can choose better terms that fit your current budget.
  • Refinancing is often easier if you have good credit or improved income.
Keep in mind: You’ll still have negative equity—but you might manage it more efficiently.

2. Make Extra Payments

It’s not flashy, but it works. Throwing a little extra cash at your principal each month can speed up your escape from negative equity.
Strategies to try:
  • Round up your payments (e.g., $315 becomes $350).
  • Make biweekly payments instead of monthly.
  • Drop any surprise cash (bonuses, tax returns) on your balance.
Why it helps: You’re shrinking the balance faster than the car depreciates. Slow and steady wins this race.

3. Sell It Yourself (Yes, Even with Negative Equity)

Dealerships often offer less than your car is worth. Selling privately could net you a higher price—and shrink the equity gap.
Here’s how:
  • Get a payoff quote from your lender.
  • Use sites like Kelley Blue Book or Edmunds to find your car’s market value.
  • If your sale price doesn’t cover your loan, be ready to pay the difference at closing.
Pro Tip: Call your lender—they might be able to help with the transaction logistics.

4. Trade It In (Cautiously)

You can trade your car in for a new one, but tread carefully. Many dealers will roll the negative equity into your next loan, increasing what you owe and setting you up for a repeat performance.
Better strategy: If you absolutely need a new vehicle, go for one that’s cheaper than your current ride. That way, the new loan might balance out the equity loss without skyrocketing your payment.
Warning: Read the fine print. Make sure the full payoff is included in your trade-in deal.

5. Buy Out Your Lease (If You’re Leasing)

Leasing? You might be sitting on a secret equity goldmine. If your leased vehicle is worth more than the buyout price, buying it out and selling it could leave you with a profit—or at least cut your losses.
Why lease buyouts can be a win:
  • The residual value in your lease agreement is set in stone.
  • If market prices have gone up, you might get your car for less than it’s worth.
  • Services like Lease End can help you buy out your lease without stepping foot in a dealership.
Bonus: Even if you're not keeping the car, flipping it could put cash in your pocket or help you break even on your loan.

6. Return the Car (Last Resort Only)

If your financial situation is dire, voluntarily surrendering the car is an option—but it's one with serious consequences.
Why it’s risky:
  • Your credit score will take a major hit.
  • You’ll still owe the remaining balance after the lender sells the car at auction.
  • That balance can be thousands of dollars—plus fees.
Only consider this if no other option is financially or logistically possible.

7. Stick with the Car and Pay It Off

Sometimes the simplest answer is the best: keep the car and focus on paying down the loan.
When this makes sense:
  • Your car’s reliable and doesn’t need costly repairs.
  • You can afford to accelerate your payments.
  • You’re not in a rush to trade up.
Pro Tip: This path may not be exciting, but it’s often the most financially sound if you’re not desperate to switch rides.

Final Thought: Know Where You Stand

Before you choose your path, get clear on the numbers:
  • What’s your current loan balance?
  • What’s your car actually worth?
  • Can you afford to pay the difference if needed?
Once you know that, you’ll have a clearer picture of whether to refinance, buy out your lease, or hold tight.
And if you’re leasing and curious whether a buyout could save (or make) you money? Lease End can help. We handle the title, loan, registration, and all the DMV stuff. You just handle the victory dance.
Ready to ditch that upside-down car feeling? Let’s get started.

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About the author
Adam Broud

Adam Broud is a writer and comedian based out of Salt Lake City, Utah. As a professional stand-up comedian with an MBA, his writing uniquely blends the worlds of business and comedy. Adam's writing for ads and comedy has appeared in places such as Buzzfeed, Vanity Fair, your television, and his mom's box of keepsakes. Feel free to review his writing from any of those places, but just know it's kinda weird if you choose his mom's house.

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