Bite the bullet to get right side up

Dear Terry,
What is the best way to pay down a car loan when you are upside down? We would like to trade in our car to purchase a new car but we are way upside down on our current loan. I'm planning on making extra payments every month. Do you have any suggestions?
-- Darlene

Dear Darlene,
Making extra payments will help get you right side up on your loan, but you may want to calculate the difference between what you owe on the car and what you could sell it for. If you have the cash to make up the difference, that could be a more cost-effective way to dump the car because you would avoid any further interest charges.

Here are this week's reader questions:

• Don't bet the farm on future value of collectible cars • We paid $30,000 over sticker for a car. Can we get it back? • Leasing a car to lower debt-to-income ratio. Can I get out of it? • What's the best way to get right side up in my car loan?

If you have a question for Terry, e-mail him at Driving for Dollars.