Your options, ranked
- Keep the vehicle and refinance at a lower rate, ideally on a shorter term. Slowest to fix, cheapest overall.
- Pay extra toward principal for a few months to close the gap.
- Sell privately and cover the shortfall with savings, which is often the cleanest exit.
- Trade in and roll the difference into a new loan, which usually deepens the problem.
- Voluntary repossession, which should be a last resort because of the credit damage.
Why refinancing first is usually right
A lower rate combined with a shorter term attacks the gap from both sides at once. The balance falls faster and less of each payment goes to interest.
How the gap is calculated
Take the current wholesale value of the vehicle and subtract your payoff amount. A negative result is your equity position. Ask a dealer for a wholesale appraisal, not a retail listing price.
Save thousands
Save thousands by refinancing your vehicle anywhere in Canada.
Free to apply, no obligation, and no credit check to pre-qualify.
Frequently asked questions
Yes, in many cases. Small gaps can be absorbed into the new loan, and larger gaps may need a down payment or co-signer.
Rarely. It usually means borrowing more than the new vehicle is worth on day one.
The equity position itself does not appear on your credit report. The payment history does.