Frequently Asked Questions about Rhode Island Auto Loans

Here are the answers to the most commonly asked questions about Rhode Island auto loans.

What does it mean to be upside-down in an auto loan?

If you are upside-down in Rhode Island auto loans, it means you owe more on the loan that your car is worth. This happens to many car buyers who opt for loans with excessively long terms. You might also become upside-down in your loan if you do no make a sufficient down payment. Because new cars depreciate so much in the first year, you will almost inevitably be upside-down on the deal unless you make a down payment of around 20%.

What if I total my car and the insurance company is not offering enough to pay off my car loan?

This is a tough situation to be in unless you can somehow prove that your car is worth more than what your insurance company is offering. You can do this by collecting actual cash value statistics from other insurers or online resources in order to prove your car is worth more. If your insurer still will not give you enough to pay off your Rhode Island auto loan, then you should probably consult your policy for an arbitration clause. You can go before an impartial party to present your case, and the arbitrator will make a decision based on the facts.

I still owe money on my current car, but I would like to buy a new one. Can’t I just roll the debt into a new Rhode Island auto loan?

You can, but you probably shouldn’t. Unless your present car is absolutely on its last legs, you’d be better off just sticking it out until the car is paid off free and clear. Rhode Island auto loans that roll old vehicle debt into a new loan are tremendously risky and have extraordinarily high interest rates. You will end up owing way more on your loan than your new vehicle is worth from square one, which is a precarious situation to be in.

Should I even consider financing from the dealership or should I just get a loan from an independent lender?

Usually, you will get Rhode Island auto loans with much more competitive interest rates from lenders that are not affiliated with the dealer. By going directly to a lender, you avoid the dealer mark-up of your interest rate. If you really think the dealer might be able to give you a good deal, you have to go in with some negotiating power. Typically, this means having a letter from a bank or other lender guaranteeing you a good interest rate. To compete, the dealer will have to match or beat this rate.