Trading in a vehicle with negative equity should be avoided and this situation can be made even worse if you are attempting to finance your next vehicle with a bad credit auto loan.

Here at Auto Credit Express, we know that the short answer is “yes”. But be careful if you still owe money on it and are “upside down”…

One of the hardest situations to avoid in today's car market is negative equity. Once you fall into the trap, it's very difficult to get out of, even with a low interest car loan. A bad credit car loan compounds the problem. But can this be done if you need a bad credit car loan for your next car?

If you're purchasing a used car, especially if it's part of your efforts at repairing bad credit, you owe it to yourself to check for any open recalls as well as have it thoroughly inspected before taking delivery.

Having a vehicle repossessed is never a good thing. In fact, having one appear on a credit is one of the worst things that can happen to any borrower. But it is especially bad if the auto loan in question belongs to a consumer with problem credit.

Borrowers having problems paying their car loans should call the lender and explain their situation. Not only is repossession is a black mark on their credit reports – often preventing them from getting a car loan for at least a year, it could end up costing them hundreds if not thousands of dollars in taxes owed to the government.

Vehicle repossession is never a good thing and a black mark like this can linger on a credit report for seven years or longer. Multiple repossessions are even worse and, for the most part, consumers must wait until just one appears in their credit file.

For those unfamiliar with what the phrase buy here pay here means, it refers to a car dealer where you can not only purchase a car, but a dealership where you can finance it, right there, as well. In this case financing is arranged with money that is borrowed from the dealer instead of a bank, credit union or finance company.

In most cases, consumers who have had a vehicle repossessed will need to wait at least a year until they can expect to get approved for a car loan with a subprime lender. While there are exceptions to this rule and buyers should still give it a try, the number of lenders willing to do this is so small that most borrowers should be prepared for a high interest rate and with the large down payment BHPH dealers will require, if they need a vehicle right away.

Consumers with problem credit typically ask us about auto leasing because they're either looking at more expensive vehicles or they want to keep their car loan payments as low as possible.