How to Eliminate Car Debt

I don't think I'm alone when I say that I have a car that is upside down in value. My problem, is how do I sell the car in that position? Honestly, there are only a few ways:
- Pay on the loan until the loan is paid in full.
- Pay on the loan until the upside down portion is equal to the value.
- Finance the upside down portion and sell the car.
- Trade in the vehicle and roll the upside down portion into the next car.

I've proposed 3 options, but they are not all great ideas. Let's take a look at them individually - last to first.

Trade in the vehicle and roll the upside down portion into the next car
This option is what gets people in a vicious cycle of upside down vehicles. If you have a car that is upside down (owe more than the value) of $10,000 and you want to reduce that liability, you could go to a dealership, pick out that shiny new car with a $5,000 rebate and walk away with rolling in only $5,000 into the new loan. And the cycle begins. You drive off the lot, and your new car immediately loses some value. The debt to value ratio can take years to even out. In many cases, you'll end up in the same position you started in...wanting to get out of the upside down position. You could, however, trade in your car for a "beater" and lessen the blow. If you were upside down $5,000 and were able to roll 100% onto another car, then you could buy a $5,000 car, roll $5,000 into it, and then pay it off as quickly as you can with the money you save after the transaction. From what I understand, you will be hard pressed to find financing that will allow more than 100% rollover, so this may not be possible for you.

Finance the upside down portion and sell the car
Dave Ramsey is a proponent of this idea. If you can drum up the cash and pay the upside down payment, then you'll be in the position to sell the car to a private owner. Taking out a loan to pay on a loan is not optimal, but it would result in a lesser liability. If your car is valued at $20,000 on KBB.com selling to a private party, and you owe $30,000 on the car, it would be a wise to decision to take out a loan for $10,000 and sell the car for $20,000. This would leave you with a $10,000 liability instead of $30,000. Unfortunately, it's not as easy to sell car when you owe on it. A buyer would be taking a risk paying for something they won't be able to walk away with. The car most likely has to be paid for in full so that the title can be transferred...which could take weeks. Also, if you took out a loan for the upside down portion, the payments on that will begin immediately. If your car doesn't sell right away, you'll have 2 sets of payments to contend with. Not a great option.

Pay on the loan until the upside down portion is equal to the value
If you simply do nothing, there will be a point where the value of the car will level off and your loan amount will equal the value. This break even point varies on car and upside down amount. In my opinion, that point is usually 3 years on a 4 year loan, and 4 years on a 6 year loan.

Pay on the loan until the loan is paid in full
This is obviously the easiest thing to do. This may not be a grand idea, but since you made your bed, you have to lay in it. There may be circumstances that do not allow you to do the other items mentioned above. But doing nothing has it's advantages too. If you pay the loan in full and on time, you will then have a paid for car. It will then be a great one owner car where you know all the vehicle history. You can then hopefully keep it for another 5+ years, right? That's money in your pocket.