Win your car finance with CarFinance 247

If you win, we'll pay off the finance on your car. It's that simple! Your car becomes completely yours, free and clear.

This amazing offer is open to anyone who has secured car finance with us throughout 2023, including Decemeber 2023!

This means that there's still time to enter, get your finance in December, and you're automatically in!

The lucky winner will be announced the week beginning 5th February 2024 on our instagram page.

Terms and Conditions apply.

Negative Equity
Car Finance

Car Loans | CarFinance 247
Get my quote Rates from 9.9% APR. Representative APR 19.9%
CarFinance 247 is a credit broker, not a lender.
Car Loans | CarFinance 247

Rates from 9.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status.

Rates from 9.9% APR. Representative 19.9% APR. Hire Purchase (HP) Example: Borrow £10,000 over 5 years with a £0 deposit. Representative APR 19.9% fixed rate. Monthly payment: £255.50. Total cost of credit: £5,329.80. Total amount repayable: £15,329.80. Car Finance 247 Limited is a credit broker not a lender.

We look to find the best rate from our panel of lenders and will offer you the best deal that you're eligible for. We earn a commission for providing our services, but this does not influence the interest rate you're offered in any way.

By planting a tree for every car finance agreement issued to one of our customers, CarFinance 247 is driving towards a more sustainable future.

If you need negative equity car finance and you're not sure where to turn, there's no need to worry. Owing more to your lender than your car is worth can be stressful, and it may make you doubt whether financing another vehicle is the right option for you.

However, there’s no need to panic, as CarFinance 247 is here to help. We believe that all motorists should have the right to purchase a car when needed, and we aim to remove the barriers that stop car ownership in its tracks. We have a broad panel of lenders and we always consider our finance applications based on their individual merits, so the likelihood is that we'll be able to find a suitable deal for you.

If you're considering taking out a new finance agreement, please click the Get my quote button to find out what deals are available. Alternatively, if you'd like to discuss your options with us first, please get in touch on 0333 247 1247.

What is negative equity?

Negative equity is a term commonly used to refer to mortgages, but it can apply to any financial transaction involving loans. It happens when the amount you owe on your car finance loan is more than your car is currently worth. However, finding yourself in this position isn’t as rare as you might think. Cars naturally depreciate (lose their value) over time, and it's common for newer vehicles to depreciate faster than older models.

Depreciation isn’t an exact science though. Some models are believed to hold their value better than others, while factors such as the way you drive your car and the condition it’s in can affect its value over time.

Typically, new cars depreciate quickly in their first few years, although this usually slows down as time goes on. It's also highly dependent on the type of car finance you have.

But in a personal contract purchase agreement (PCP), the unpredictable nature of depreciation can have more of an effect. This is because your balloon payment – the amount you need to pay at the end of your agreement if you want to buy the car outright – is based on the expected value of your car at that time (which can also depend on the number of miles you’re expected to drive). If your car has lost value more quickly than predicted, you could find that your balloon payment costs more than the car is worth.

Negative equity can also be an issue if you need to sell or part-exchange your car during the loan term and you need to pay a settlement figure that’s more than your car is worth.

How to deal with negative car equity

If you've found yourself in negative equity, it can be a difficult situation to tackle. However, you don’t have to be stuck there forever!  If you're in negative equity, you can still finance a car.

Here at CarFinance 247, we work with a large panel of lenders and some of them can provide finance options for people in negative equity.

In most cases of this nature, people tend to choose a more affordable model to drive, taking out a new finance agreement on that vehicle. You'll usually have to pay the cost of your negative equity car loan, as well as the additional finance fees from your current car. However, we can arrange to combine both payments, making the procedure much easier.

The process usually follows these steps:

  1. Pick a cheaper model to finance (it can be either a new or a used car)
  2. Apply for finance on your new vehicle and trade in the old one
  3. Pay your monthly payments, which will include your new finance payments, as well as the remaining debt on your old car

However, negative equity finance isn't your only option. You could also consider refinancing your current vehicle, as well as voluntary termination. Voluntary termination allows you to terminate your contract if you've already paid more than half the amount payable for your car loan. All you need to do is notify your lender and return the car, and you should have nothing more to pay. 

If you're struggling to pay your monthly finance payments, your lender may also be able to discuss different payment plans with you, so it's worth speaking to them first.

Watch this short video to find out more.

Can I get car finance if I have negative equity?

If you find yourself in negative equity, you don’t have to be stuck there forever! Here at CarFinance 247, we work with a vast panel of lenders - some of which provide finance options for people in negative equity.

Our loans can help people who are looking to trade in their current car for a newer or cheaper model, combining the cost of clearing the negative equity and the price of a new car into one monthly payment. 

We aim to make the process as easy as possible for our customers, and there's always someone on hand to help if you need more advice. 

Just speak to one of our friendly account managers and we'll run you through the process.

Your negative equity options

So, you’ve found yourself in negative equity –  what are your options?

There are a few possibilities you can work through:

  • Do nothing: If you have an HP agreement, you can continue making your repayments until the end of your loan term. If it’s a PCP deal, you can simply hand the car back.
  • Pay the difference: If your agreement allows, you could sell or trade in your car and make up the difference from your own savings.
  • Apply for negative equity car finance: You can make an application to find a loan that will cover the cost of your settlement figure and your new car - otherwise known as negative equity car finance.
  • Voluntary termination: As long as you’ve repaid 50% of the total amount payable (including interest, fees and the balloon payment in a PCP deal), you have the right to voluntarily terminate your agreement and hand the vehicle back.

Before you make a commitment, it’s important to educate yourself as much as possible, so you can make sure you’re choosing the right option for your needs.

If you need more advice first, please get in touch and we’ll be happy to help.

How can I avoid negative equity?

Unfortunately, there’s no way to guarantee that you’ll never be in negative equity. It’s virtually impossible to know how quickly your vehicle will depreciate, and the car market can be unpredictable. 

There are some steps you can take to try and avoid negative equity:

  • Conduct thorough research before committing to a vehicle, as some cars depreciate in value faster than others
  • Pay a deposit instead of opting for no deposit car finance
  • Keep your vehicle maintained and in good condition
  • Don’t exceed your annual mileage limit
  • Take out HP finance instead of PCP

As a rule of thumb, brand-new cars can lose their value quickly, especially in the first three years. You might be able to reduce the chance of landing in negative equity if you opt for a used car. A large deposit could help too, as this will decrease your overall loan amount.

If you’d like to see which cars are currently available in your area, please see our handy Car Search tool.

Why come to us for negative equity car finance?

For us, car finance is all about helping people improve their everyday lives. We believe that everyone who needs a vehicle should have access to one, whether you need a car, a van, a motorbike, a motorhome, or a caravan.

Whether you need a car for the school run, the weekly shop, or your daily commute, we’ll look to find you the best negative equity car finance deal from our panel of lenders.

Plus, you’ll have a dedicated account manager on hand to help you through the process and speak to the dealership on your behalf.

What’s next? How to apply

If you think you’re ready to give negative equity car finance a go, we’re here to help! 

You can get a free no obligation quote here if you’d like to see what your loan might look like. Once you’ve got your quote, our team of dedicated account managers will get in touch to run you through the details and ensure you’re happy to go ahead with your deal.

Your account manager can answer any questions you have and grant you access to our car search – a treasure trove of over 100,000 used cars ready and waiting to find a home. 

Found a car somewhere else? 

We can still help – just let your account manager know and we’ll do our best to find you the perfect deal.

I have Negative Equity on my Current Car. Can I Use the Loan to Clear The Debt?

Yes, you can. Negative equity car finance is specifically designed for these circumstances. 

We can help people in negative equity - all you need to do is make an application and choose another car, and we’ll find a deal with our panel of lenders.

Can I give my car back to the finance company?

Under UK law, you can give your car back to your finance company (otherwise known as Voluntary Termination), so long as you’ve repaid at least 50% of the total amount payable. This figure also includes the fees, interest and balloon payment (if applicable).

However, if you’ve not repaid 50% of the total amount, you can pay a one off payment to make up the difference. One thing to note is that if your vehicle has any damage, you may have to pay additional charges.

Can I part exchange my car with negative equity?

If you need to change your car, you can part exchange your vehicle with negative equity - as long as your new loan is affordable. 

The negative equity from your previous vehicle can be rolled into your new finance agreement, although this may make your monthly payments higher.

How do I get out of negative equity?

Negative equity can be worrying but you can get out of it if you continue paying your loan until your finance agreement has finished.

If this isn’t something you’d like to do, you may be able to finance more than the value of your current car and part exchange for a different model. In these cases, you’re essentially refinancing your negative equity into a negative equity finance deal. However, your repayments may be higher as a result, so it’s important to work out whether you can afford to take out a new deal first.

Will putting down a larger deposit reduce my chances of negative equity?

There are a number of factors that come into play when weighing up the chances of negative equity, so this isn’t something we can state for certain.

However, placing a larger deposit means you have more equity in your car, so you’re less likely to suffer from negative equity along the way.

What is the best way to deal with negative equity?

This is something that depends on your personal circumstances and preferences.

In most cases, the best approach is to calculate your existing negative equity and continue paying your finance - once your car is paid off, you won’t be in negative equity anymore.

However, you could also consider voluntary termination and negative equity car finance. Another option is to contact your lender, as they may be able to provide a different payment plan if you are struggling to make your current payments.

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* The UK's largest online car finance broker by unique users to the website. Based on Similar Web data – 1,137,647 to CarFinance 247 vs. 753,819 for nearest competitor. January to June 2023.

CarFinance 247 is a trading name of CarFinance 247 Limited. Registered office: Universal Square, Devonshire Street North, Manchester, M12 6JH. Registered in England. (Registration Number 06035525).

CarFinance 247 is authorised and regulated by the Financial Conduct Authority for insurance distribution and credit broking (Firm Reference Number: 653019). CarFinance 247 is registered with the ICO (Registration Number Z1897658).

Finance is subject to status and is only available to UK residents aged 18 and over. Written quotations are available on request.

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