Getting Out of Upside Down

Out-from-Under Tips
So, the question is, how do you stop this vicious cycle? Here are some ways to get out from under being upside-down:


Most important, consider your automotive purchases more carefully in the first place. Look into what is known as the "residual," which is the projected, future resale value. Vehicles with higher residuals are less expensive to own in the long term, even though they may cost more up front, because they depreciate less; the total cost of ownership can be significantly less.


Purchase mainstream vehicles. The more specialized the vehicle, the more difficult it will be to sell in the future. A higher trim level four-door sedan, in a fairly common color like silver, will hold onto its value. A sports model, with a funky paint job, may not.


Do not personalize it with custom wheels, dark tinted windows, aftermarket sound systems, a loud exhaust system, lift kits and the like. Not only will you never get your money back for those things, in many cases they will actually detract from the value. They will certainly make the vehicle more difficult to sell in the future, because you will have to find a buyer whose taste in personalization is exactly like yours.


Resist the urge to keep buying new cars on a regular basis. Take care of what you have and hang onto it. Pay it off. If you've taken care of it, then it will bring more money when you sell it or trade it in. And if you've paid it off, you will then have some positive, rather than negative, equity. Then go shopping for another vehicle with some money in your bank account.