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Negative Equity Car Finance​

Our negative equity car finance service means you can still change your current car for a new one, even if you have an outstanding loan balance.

At We Finance Any Car, we recognise that being in negative equity can be challenging. But don’t worry – this position is more common than you might think and, with our support, you can still find a practical and accessible car finance solution that suits you.

There are many reasons that you might need to upgrade your vehicle. Maybe your current car is breaking down regularly and you need something more reliable. You might be after a larger model with all the latest gadgets and gizmos. Whatever your circumstances, negative equity shouldn’t hold you back from getting the car you want. 

So, how does it all work?

Our simple process is designed to get you behind the wheel of your new car in no time at all. Our experts will assess the value of your current car and identify how much negative equity you need to cover. From there, you will have 2 options. You can either pay off your existing loan or transfer the negative equity to your new deal. It’s as simple as that!

Need a little extra help finding the right car for you? When you choose We Finance Any Car, you will have access to an exciting range of makes and models from reputable dealers. New or used, commuter or family-friendly, city driving or offroad adventure – the options are truly endless!

What you can expect from our negative equity car finance service:

-Team of negative equity experts

-Selection of high-quality cars for sale

-Tailored finance deals

-Fuss-free application process

-Panel of specialist lenders

-End-to-end support

Drive away from negative equity with the car of your dreams – submit an application today!

Getting to grips with negative equity car finance​

We know that car finance can get a bit technical, and negative equity is no exception. If you’re unsure whether you’re in negative equity or are feeling overwhelmed by endless terms or conditions, you’re in the right place! At We Finance Any Car, we’re here to make things as straightforward as possible.

Let’s break down how negative equity can affect different types of car finance agreements:

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Hire purchase (HP)

When you sign an HP finance agreement, you will need to pay a fixed monthly fee over a set period of time. Once you have completed the loan term, you will be the legal owner of the car. Generally speaking, you are less likely to get into negative equity with this type of loan. This is because the payments tend to be higher than an equivalent PCP loan and you are therefore paying off the total value of the car at a much quicker rate. Found yourself in negative equity? There are options available to you! You can choose to cancel your current finance agreement and swap the car for a cheaper alternative, where the negative equity amount will be incorporated into the new loan. Although it might not be the vehicle you originally had your heart set on, there are plenty of great quality cars on the market. With our help, you're sure to find a suitable replacement that fits your preferences and budget.

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Personal contract purchase (PCP)​

Compared to HP car finance, you are generally paying a lower fee each month with a PCP contract. This is due to the balloon payment that you make at the end of the contract (if you wish to keep the car). Although this is a preferable option for many drivers, especially if you are someone who likes to switch up your car every few years, it can make being in negative equity more likely. The good news? There are still options available to you! Found yourself in negative equity? Here's what we would suggest: If you have PCP car finance with negative equity, you have a choice of 3 options. Depending on your personal situation, you can either return the car, pay the optional balloon fee, or trade-in the car for a replacement. Remember, if you choose to terminate the contract, you will not have ownership of the car and you may be required to pay additional mileage or wear and tear fees.

Why am I in negative equity?

Cars lose their value over time – this is often referred to as depreciation. If your new car drops in value faster than you’ve paid off the loan, you may find yourself in negative equity. This can be frustrating, but don’t panic! If you are consistently meeting your monthly payment deadlines, the car’s value will decrease at a slower rate over time and the contract should balance out. 

Aside from depreciation, there are some other factors that cause negative equity. This can be as simple as wanting to switch out your car before you’ve completed the loan term. Alternatively, falling behind on your payments can make it more difficult to keep up with the depreciating value of the car. 

Circumstances that are beyond your control, such as an accident, may also reduce the car’s value below the amount that you owe on the loan. 

Why does a car depreciate in value?

Depreciation is a fancy way of saying that a car has decreased in worth over time. This is inevitable for the majority of vehicles, however, the rate and extent of depreciation will vary based on several factors:

  • Age and mileage: The older a car is, the more miles it will have driven. This will inevitably lead to more signs of wear and tear, such as fading paint and the odd scratch mark, making it less desirable and lowering its value. 
  • Brand reputation: Drivers have more confidence in brands with a reputation for producing high-quality and reliable cars. They therefore tend to be in higher demand, helping to lessen the impact of depreciation. 
  • Features: Let’s face it, a car with an impressive array of features is going to be more attractive than one with a limited selection, enhancing the level of comfort and making for a more enjoyable driving experience. This can help the car to better hold its value over time. 
  • Condition: A car that has been well looked after is likely to be in good condition and will therefore have a long lifespan, contributing to a slower depreciation rate. On the other hand, a car that has been neglected may experience a few more mechanical issues and will need to be replaced much sooner. 
  • Market demand: In simple terms, a popular car will lose its value at a much slower rate than one that’s sitting at the back of the dealership. Certain trends can also influence this, such as the increased demand for hybrid and electric vehicles. 
Do new cars depreciate quicker than used cars?

Generally speaking, newer cars tend to depreciate quicker than older cars. Once a car is purchased, it experiences something called an ‘initial depreciation’. It doesn’t matter if the car has just left the dealership or has been driven for a few miles, there will be an immediate drop in value (usually a large percentage of its original purchase price). This is something to bare in mind as it will likely affect the car’s resale value if you decide to sell it in the future.

Although depreciation isn’t always a major issue when considering a finance deal, it is something to consider. If you are particularly concerned about depreciation, or you’re looking for something on the cheaper side, you may want to opt for a used car finance deal.

The good news is that there’s a whole host of cars available on the used market. Whether you have a specific model in mind, are struggling with a limited credit history, or don’t quite have the budget to buy brand new, there’s something to suit every driving need.

Haven’t found the car of your dreams? No problem! At We Finance Any Car, we have hundreds of thousands of pre-loved vehicles to explore. Simply pop on over to our car search portal and we will help you with the rest. 

Will being in negative equity impact my credit score?

Although being in negative equity on a car loan won’t directly affect your score, it may lead to financial difficulties. If you are unable to pay the monthly fees on time, or you consistently miss loan payments altogether, it can have a negative impact on your credit rating. This can remain on your report for several years and may act as a barrier to securing another finance agreement. 

If you are being held back by your credit score, we offer a flexible bad credit car finance service. We work with a panel of specialist lenders to try and bag you the best deal on the market, regardless of your financial circumstances.

We want you to enjoy a smooth loan term and would always recommend reviewing your budget before you sign any finance deal. Using our free car finance calculator, you can get a rough view of what your monthly payments will look like and determine whether the loan is affordable.

If you are unsure where to begin, our friendly team are always on hand to answer any questions or queries you may have. Get in touch now

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About Us

If you are looking for car finance, you are in the right place!

We have years of experience in car finance, a very extensive lending panel and a team that is set up to get you the car you want at the best finance rate possible. If you have already found a car and just need the finance – great! If you need help finding a car then we are there for you as well – in fact, we have access to over 300,000 cars.

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