I want to trade down my car that I still owe $7,000 on that's worth $5,000. What options do I have?

I want to trade down my car that I still owe $7,000 on that's worth $5,000. What options do I have?
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#1

I am a 22 year old male whos car insurance is so high due to not having my car paid off up top of a car note. I was wondering if I could return the car to something cheaper


#2

Thanks for your question to NerdWallet. Being upside down in a car payment is a result of paying too much for the car when you initially purchased it, and/or having a very high interest rate on your loan. Unfortunately, the $2k deficiency will have to be paid off. If you trade the car in, the $2k will be added into the price of the new car. It will become a vicious cycle because you will be upside down on the new car as well. Try to get the car refinanced at a lower interest rate.
If the insurance is excessively high, you can consider trading for another vehicle which is valued at around $5k. You’ll still be upside down since you’ll be responsible for the extra $2k. However, there will be a small savings since the insurance premium is more economical. I hope that this helps!


#3

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