If you are a car owner who has rolled negative equity into your new car, you might be one of many people who is now upside on that loan. You are probably wondering what to do about and how to get out of it. One strategy to consider is getting a personal loan from your bank. Here is what you need to know about whether that is a good idea:

What is a Personal Loan?

A personal loan is a loan that doesn’t have collateral attached to it. This means you aren’t putting up your home or car to secure it. Instead, lenders, such as when you get a car, will use your credit score. Depending on your score, they will assign you the loan at a certain interest rate. The higher your score, the lower your rate will be generally.

According to CrediReady, “Although the terms can vary from lender to lender, you can find personal loans from $100 and up to $50,000. Some loan terms range from 12 months to decades depending on the amount, the borrower, and the lender.”

Is a Personal Loan a Good Strategy to Get Out of My Negative Equity Situation?

Assuming that you can get a bank to lend you the money, then yes, getting a personal loan is a great way to avoid your upside loan situation on your car. By not needing to have collateral, you aren’t having to put your other assets at risk but can still get enough money to solve your negative equity problems due to the extra infusion of finances.

How to Negotiate With the Bank to Get a Personal Loan

The key to negotiating with the bank on getting a personal loan is showing them that they already have a partially unsecured loan anyway. Demonstrate that with this new loan, you can pay off your old loan.

Looking to the Future: Negotiating Down the Payoff and Avoiding a Repeat

The payoff on your car loan and settling it are what your priority should be when you get your new personal loan. Show the lenders how getting some of their money back is better than nothing, and paint the positives of how having more money in their pocket now is better than the same later on. Then, when you have gotten out of this situation, set a hard budget and don’t allow yourself to go over a monthly amount so your credit can be built back up over time.

When it comes to being upside down on your loan with negative equity on your car, it can be a frustrating experience. After all, you have a lot of other expense on your mind and this just adds to the bills. However, if you play your cards right and get a personal loan then you can get the kind of extra cash you need. That way, you can set yourself up for more financial success and the ability to keep your payments in check.

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