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You are here: Experts > Autos > Tips on Buying Cars > Tips on Buying Cars > Owe more on car
Expert: Shari - 11/7/2009
Question
I have a 2008 Saturn worth about 12,500. I owe 18,000 on it. I want a 2010 Equinox sticker is 24,000. I was approved by GMAC for $23,690. My car payment now is 487 a month and I always pay more - around 550. Can you explain this to me? What happens to what I owe. I can afford a payment of over $500 but want to keep it as low as possible. Thanks!
Answer
Claudia, the difference between what you owe (18,000) and what the car is worth (12,500) is called negative equity and will be tacked on top of the new loan. So $5500 will be rolled into the new loan. Which will raise your payment approx 110, ($20.00 per $1000). Be very careful here as the dealer will come out making a lot of money and you will be paying for it over the next 5 years. You were probably approved for more and the dealer just told you that. Have they asked you for money down?
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