It is far more common than people assume, particularly in the first half of a finance term. It is a problem to be managed, not a catastrophe.
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Depreciation is front-loaded and finance repayment is not. A car loses value fastest in its first two years while your balance comes down steadily, so for a period the two lines cross the wrong way.
Small deposits, long terms and a market-wide fall in values all deepen it. Used EV sellers have seen a particularly sharp version of this recently.
When you are in negative equity, every pound of difference between buyers comes straight out of the shortfall you have to fund.
A £600 stronger offer is not an abstract gain — it is £600 less you have to find. This is the situation where accepting the first number is most expensive.
Questions
When the finance settlement figure is higher than the vehicle is worth, so clearing the agreement costs more than the car raises.
Yes, provided you can cover the difference between the offer and the settlement figure.
It is commonly offered and rarely sensible. You end up paying interest on the deficit from the old car for the length of the new agreement.
No. It is a normal consequence of depreciation running ahead of repayment, particularly early in a term.
Tell us about it once. We check the market and come back with the strongest price we can confirm.
Takes a couple of minutes.
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