When you buy a car, you must understand what you’re getting into. As a new owner, you don’t want to get stuck with an underpowered vehicle that will cost more in repairs than it’s worth. But what if the price of your car is more than fair value? If this is the case, then there may be some equity left over after the purchase process is completed.

What Is Positive and Negative Equity?

Positive equity is the amount of money you have in your car that exceeds its worth. For example, let’s say your car is worth $10,000, and you owe $9,000 on it. This means that there is $1,000 cash in your pocket that you can write a check for if needed. In this case, the car has positive equity because there is more money in the account than it’s worth.

On the other hand, negative equity means that what you owe on your vehicle is more than what it’s worth. In other words, if someone sold their Honda Accord for $5,000 cash and then paid off their auto loan with that money, they would still be underwater by about $1,000 because the value of their car was less than what they owed on it.

How Can Negative Equity Affect Me?

Negative equity can affect you in several ways. If you have negative equity, your lender may require a larger down payment or other types of collateral from you before they release your car from lien status.

Your lender may ask for additional collateral if they determine that there wasn’t enough money coming in from selling your car to cover your monthly payments. For instance, let’s say you have $5,000 worth of negative equity but only make $1,000 monthly payments on your everyone approved car loans Calgary. In this case, your lender may ask for $4,000 worth of additional collateral before releasing the title to your car so they can sell it at auction.

How Do I Check My Car’s Equity in Canada?

You can check the equity in your car by going to a local used car dealership, or you can call one of the numerous online auto valuation companies.

The first thing to do is look at what they’re selling your car for, then decide if it’s worth buying another one. If you decide that you want another vehicle, find out how much money they will pay for your current vehicle and any other fees before deciding whether or not this is an option for you.

When Is the Right Time to Trade in My Car?

The right time to trade in your car depends on how long you’ve owned your vehicle. If you bought it brand new and have no intention of buying another one, then selling it isn’t really an option for you.

However, selling it might be good if you want to upgrade or downsize your vehicle. Selling a used car can be a great way to get rid of an old model that doesn’t suit your needs anymore without paying for the depreciation.

You should know whether the car you have through bad credit car loans Alberta is an asset or a liability. This can help ensure you’re on the right track with your finances.