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Whether it's one too many indulgent nights eating out, that extra pair of shoes you just had to have, or a car payment that ends up being more than what you were planning, it's easy to overstep your budget. And now with the economy teetering back and forth and inflation affecting everything, those extra expenses can be stressful, especially if you're stuck paying for a vehicle you can't afford.
According to recent data from Edmunds, more than 15% of consumers who bought a new car in the last three months of 2022 committed to a monthly payment of at least $1,000. Even if you're not paying four-digit payments per month, upside-down car payments are financially unwise. Here are a few ways to survive—and fix—the problem.
Use Volkswagen SouthTowne's exchange program
Volkswagen SouthTowne has a new program allowing you to exchange your vehicle and get into a different one that fits your budget.
They are offering low-interest rates like 1.99% for 36 months on used cars or 3.9% for 72 months on select SUVs, up to $9,000* off MSRP and very competitive lease offers. No matter your situation, Volkswagen SouthTowne's Exchange program can help lower your payments and get you into a car that suits your lifestyle and your budget.
Keep making the payment
The best and most important thing to do is to keep making your payment on time. Experian explains that a single 30-day late payment on your credit can wreck your score and wreak havoc on your ability to qualify for other loans, including a mortgage.
While no one likes the idea of owing more than a car is worth, you will, eventually, bring down the balance, especially if you can make extra payments as Nerd Wallet suggests. It may take time, but it is possible to get right side up and start building positive equity while maintaining and even improving your credit score.
Refinance
Another option, especially if you've paid down the balance to a point where you're not upside down, is to refinance. Depending on the interest rate, you may even be able to reduce your term as well and keep your payment about the same or lower than it was before. Or, if you'd like to get the balance paid down faster, Nerd Wallet suggests considering a shorter term. This may make your payment higher, but it will build positive equity faster. Regardless, refinancing is an easy way to alleviate some of the monthly payment stress you've been feeling.
Sell or trade
Another option is to sell the vehicle. Be done with it. If you don't need another car, this option makes a lot of sense for those wanting to escape an expensive situation. Keep in mind that if you owe more than what you sell it for, you will be responsible to pay off the remainder of the loan.
However, If you want to get into a more affordable car, trading in is also a great option. Sean Tucker of Kelley Blue Book reports trade-in values are higher than ever, so even if you're upside down it's likely you'll get a great deal from the buying dealer.
Whether you want to trade your car in or explore your options, stop by Volkswagen SouthTowne to learn more about their Vehicle Exchange Program. Visit vwsouthtowne.com for more information.
*Savings include tax / lease credit on 2022 ID.4 EV and require dealer-arranged financing through VCI at Volkswagen SouthTowne.
