Negative Equity

Negative equity is one of the biggest barriers to customers replacing their current cars and one of the most difficult hurdles for salesmen and dealerships to overcome.

Negative equity arises when the part exchange settlement is greater than the part exchange value. In the past this was less of a problem and could be accommodated by small adjustments to profit margin or the retail sale price.

Since 2008, consumer finances have become more stretched – deposits are smaller, repayment periods extended to 60 months and capital repayments reduced by residual value products. More potential customers have higher levels of negative equity and every dealer needs to have effective solutions to this problem without requiring customers to produce large deposits they cannot afford to pay.

Most mainstream and manufacturer funders have restrictive loan to value policies and refuse to knowingly finance any customers with negative equity, however strong their credit profiles.

Dealerplus can finance the replacement car and all the negative equity, however large, within one transaction and at a prime interest rate.