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Auto loan refinance upside down?

Can you get auto loan refinancing if you are upside down on your car?

Nicholas Hinrichsen - Published: September 3, 2020

Yes you can - and there are several methods to make it easier to get towards positive equity. Firstly - "how upside down" matters a lot. Most lenders will finance a certain amount of negative equity and often it depends on your credit. As a rough rule, or good credit customers you can loan up to 120% of the value of the car. So if the Blue Book Value is $10,000 you could loan up to $12,000. For lower credit customers (like 600 and below) often lenders will only extend less than the value of the car - more like 80%. So if you've got a vehicle worth $10,000 you can only get $8,000 in loan.

But even if you're still upside down there are creative ways to get towards "positive equity" in the vehicle.

  • Check if you bought GAP insurance or a Service contract. Often you can cancel these contracts which removes them from the loan
  • If you're still negative equity you can potentially get "2 loans" such that you payoff 80% of your loan with an auto refinance loan at a lower interest rate, and then also receive a personal loan to make up the remaining balance. Your combined payment can still be lower than your existing loan
  • Your last option is to wait a little bit and make bigger payments each month on your current loan to get to positive equity. If you make an additional $50 payment monthly, that money goes directly towards the principal in the loan. This helps you get to positive equity sooner


Haven't explored refinancing yet?
WithClutch.com is a fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.

Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.

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