What is negative equity?

Negative equity is when you owe more in finance costs than the current value of the car. Most car finance deals are set up so that you’re in negative equity for the majority of the length of your contract. It’s nothing to worry about unless you want to leave your contract part way through. 

To get out of negative equity on a car, you need to pay the settlement figure to the lender, or find a car dealer who will pay off your negative equity and tack that amount on to a new finance arrangement on a different car.