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Step 1
Know the value of your trade in. Dealers want to get a great deal so they can make a higher profit on the resell. Before you go car shopping, find out the payoff amount on your car. You can find Blue Book value online at Edmund's.
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Step 2
Use a cash rebate to cover the negative equity. Many dealerships offer incentives and rebates to entice consumers to buy a new car. Sometimes the incentive covers the negative equity. Edmund's website offers information on current incentives and rebates.
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Step 3
Roll the negative equity into the new car payment. On the paperwork, the dealer buys your trade in for the payoff amount. The dealer then adds the negative equity to the price of the new car. This way, you get a new car; but you're immediately upside down on the new car.
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Step 4
Stretch out the loan. With negative equity rolled into the cost of a new car, your minimum payment may exceed your budget. You can request a car loan with a five, six or seven year term. This lowers your monthly payment; however, it takes longer to get rid of the negative equity.
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Step 5
Have a down payment. A down payment can cover the negative equity in your trade in. Some dealerships match down payments as incentives.
