Community Manager
Community Manager

USAA Community Upsidedown Car.jpg

I’m not a huge fan of pineapple upside down cake, but you may be. On the other hand, we’re probably on the same sheet of music when it comes to being upside down with your vehicle; owing more than the vehicle is worth is not a good place to be, right?  


Here are five tips to keep you from going there: 


Skip the immediate deprecation. According to CARFAX, the average new car depreciates 10% when you drive it off the lot and an additional 10% within the first year1. Instead of buying new, look at a lightly used vehicle. Most car makers offer certified, pre-owned programs that provide quality control, a robust warranty and a significant discount.   


Don’t finance the whole deal. A 10-20% down payment may not keep you totally above water, but it will help. Plus, it will yield a smaller monthly payment and may expand your loan options. In that same spirit, don’t finance a bunch of extras. 


Buying a New Car?

Get your rates quickly on new, used and refinanced loans. USAA Bank can help you save before you get your keys. Learn More .

Shorter is better. Hold the short jokes…at this point in my life, I’m immune. Back to loans, a shorter loan will help keep you in positive territory. Each month you’ll be knocking out more of the principal balance. Shoot for a car loan of five years or less, and shop for the best rate.  


Round up your car payment. Let’s say you’ve got a $25,000 loan at 4% interest. The payment would be $460. By rounding your payment up to $500, you knock more than six months off the loan term.  


Drive your way out of trouble. Even if you need a deep-water submersible to survive the depths of your upside-down auto loan, there’s always a way to the surface: Keep driving the vehicle. Sure, it could take years, but if you avoid the temptation to switch vehicles, you’ll drive your way to a clean slate and a new opportunity to do things right.  



1Car Depreciation: 5 Things to Consider (  ) 


 Disclosures: "Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements."

The information contained is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional advice before acting on any information you may have found in this article. This article in no way attempts to provide financial advice that relates to all personal circumstances.

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