There are many people attempting to achieve financial freedom who decide that they need to sell their car to gain some financial traction.

When they begin the selling process, they quickly realize that their car has negative equity. They are upside down. They owe more on the vehicle than the vehicle is worth.

I believe that car payments are a huge financial mistake. Not only do cars drop in value approximately 65 percent in the first four years, but the loan interest is punitive.

Car payments placed a strain on my family economy and prevented me from saving and investing for my future.

A huge car payment accompanied by negative equity has derailed many attempts to eliminate this obstacle from one’s journey toward debt freedom, but it does not have to be that way! Here are several ways that one can sell a car with negative equity.

As an example, assume we have a car with a $18,000 loan balance, but it is worth only $12,000. There is $6,000 of negative equity. Not a good situation, but it is extremely common.

A fast way to eliminate this car debt is to find a purchaser who will buy it for $12,000 and the seller uses $6,000 from savings to provide a clear title. Most people simply do not have $6,000 in savings to do this, so here are some additional options.

If one has decent credit, another option would be to acquire a signature loan for the negative equity from a credit union or bank. Sell the car for $12,000 and use the $6,000 signature loan to provide clear title. This does not totally eliminate the debt, but it will reduce the debt by two-thirds and most likely reduce the payment by a substantial amount.

Another option would be to finance the negative equity with a zero-percent credit card. Sell the car and use the zero-percent credit card loan to finance the negative equity. I am not a big fan of credit cards, but I am also not a fan of $18,000 car loans.

Another option would be to obtain a second job to produce additional income. Save up the amount equal to the negative equity so that the car can be sold with a clear title. This takes some time to accomplish and does not swiftly eliminate the huge car payment, but with some patience it will work.

Of course, your car might be great and you want to keep it. There is nothing like extra income to make the entire loan balance leave.

One more thing. Buying another a car and rolling the negative equity into a new loan is not the answer! All that transaction does is increase the debt balance and increase the negative equity, which just makes the matter even worse.

Check out JosephSangl.com this week for a more detailed series on this topic.