Car purchasing question.

This is a discussion on Car purchasing question. within the Off Topic & Humor Discussion forums, part of the The Back Porch category; I have a car which is valued at about $4.5K. My loan is still at $6.5K. I have about $2K in negative equity in my ...

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  1. #1
    Distinguished Member Array Pro2A's Avatar
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    Question Car purchasing question.

    I have a car which is valued at about $4.5K. My loan is still at $6.5K. I have about $2K in negative equity in my car. I want to trade my car and get either a dual cab truck or an SUV of some sort. My current car is not economic with fuel, and I also need extra space. Plus winters around here are harsh and difficult to drive in. I would like a 4x4 to commute and get around if there is snow on the ground. My current rear wheel drive gets stuck in half an inch of snow. In addition my girlfriend, her two girls and my son have a hard time fitting in my car. In short I need to get rid of it and soon. I have found SUV’s which I like for around $6K give or take. I understand I'm probably going to have to eat the negative equity and I am prepared for that. I'm stuck between a rock and a hard place here.

    How do I trade a car with negative equity? Can it be done? If so, what can I expect? What do I need to do? I have been on time and current with my current car payments. I really need to have a have a 4x4 and more space before winter hits. Right now, not trading is not an option. I want to know what I can expect and what needs to be done to do this.

    Thanks.

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    VIP Member Array Hiram25's Avatar
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    Try to find a deal with no interest, that will save you some money. If you get one that is better on gas, you'll also save money there. You may earn back your negative balance.
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    Quote Originally Posted by Pro2A View Post
    I have a car which is valued at about $4.5K. My loan is still at $6.5K. I have about $2K in negative equity in my car. I want to trade my car and get either a dual cab truck or an SUV of some sort. My current car is not economic with fuel, and I also need extra space. Plus winters around here are harsh and difficult to drive in. I would like a 4x4 to commute and get around if there is snow on the ground. My current rear wheel drive gets stuck in half an inch of snow. In addition my girlfriend, her two girls and my son have a hard time fitting in my car. In short I need to get rid of it and soon. I have found SUV’s which I like for around $6K give or take. I understand I'm probably going to have to eat the negative equity and I am prepared for that. I'm stuck between a rock and a hard place here.

    How do I trade a car with negative equity? Can it be done? If so, what can I expect? What do I need to do? I have been on time and current with my current car payments. I really need to have a have a 4x4 and more space before winter hits. Right now, not trading is not an option. I want to know what I can expect and what needs to be done to do this.

    Thanks.
    I would hold onto the car as the best option. Even though the fuel economy is not what you want, going to an SUV/dual cab truck will be worse and MUCH more expensive. Buy a set of snow tires for the winter and save a bundle. Generations of folks made it round PA without trucks in the winter, and you can too. Rear wheel drive works fine if you learn how to drive and steer. I learned on a rear wheel drive and drove in the snow lots, but had snow tires. Makes a big difference.

    That is my advice.
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    Distinguished Member Array Pro2A's Avatar
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    I have a Ford Mustang with a V8. I want to get a 4cyl Honda CRV 4x4. Gas will be a lot better. Even if I did all that, I still need a vehicle with more room. Thus why eating my negative equity is going to have to happen.

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    VIP Member Array boricua's Avatar
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    If you trade it in at the dealer, you will lose money for sure. I would suggest keeping it and running it to the ground while you save cash to buy what you want out right. The other option is to sell it on your own, so you don't lose as much money and buy your truck/suv.
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    Yeah, you're pretty much going to have to pay off the car before trading it in, or have the negative equity rolled into your new loan. Not fun, either way. I was in the same boat a while back, and just ended up keeping my old car until it was paid off (and I still have it, actually).
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    Member Array Aiko's Avatar
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    How much are you planning on putting down? Even with A+ credit and very good income, I don't think any bank will make a $8K loan on a $6K vehicle. Even if you had no negative equity and good credit, on used cars the banks want at least 10-15% down. My advice, stay put or pick up a side job to earn some extra cash to pay off your truck.

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    OK, here is a whole bunch of post you don't want to hear;

    You are nuts.

    All of the above posts are correct.

    Don't ever go into to debt because of a woman. (sorry, cold hard facts) Let her buy another car if she wants one.

    Mustangs can be driven in the snow. Its about weight management and torque control. I did it for years, I'm a currently mustangless mustang guy through and through.

    You can trade in your car that you are upside down on, but not on a 6k car. There is simply not enough wiggle room to work number magic.

    If you are dead set on buying another car consider this;

    This goes against my normal advice and rules of making a major purchase, but you may want to consider buying new. Here is why; There is a lot more room for the dealer to give you a little more for your Mustang, and come down on the price. He is also a little more motivated to sell a new car, and the used market is hot right now. Assuming your credit is good, banks give a much lower interest rate on news cars vs. old cars. There is also some 0% loans from the manufactures out there right now. So, that 6k car might cost you 250 a month, and a new one will cost you 300- I'd take the new.
    "Just blame Sixto"

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    VIP Member Array chiefjason's Avatar
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    Keep in mind some banks working through dealerships will not loan under a certain amount. I ran into one that would not loan less than $7K. Add to that the negative equity, it might be hard to find someone willing to work with you.

    If you sell it yourself, you will need the money immediately to pay the difference in the price and the loan. Maybe you have it and it's not an issue. That's probably the next best option. The best option IMO is keeping it.

    I've done some stupid things to get into a car. I got screwed. It took years to get back on track. I'm still kicking myself. Go into this very carefully. You could be paying for this decision for years to come.
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    Distinguished Member Array deadguy's Avatar
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    What Sixto said WRT buying new.

    Rebates help absorb the short value as well. Some companies offering 5k or more. Do your research.

    Girlfriend has to deal with it. If you were married it would be different (so would everything else). If you are only 2k upside down you should be even in a year to 18months.
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    Member Array Backnblack's Avatar
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    Quote Originally Posted by Pro2A View Post
    How do I trade a car with negative equity? Can it be done?
    It's done everyday. The negative equity get added to the vehicle you are buying.

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    Quote Originally Posted by Backnblack View Post
    It's done everyday. The negative equity get added to the vehicle you are buying.
    You're right. The dealer needs to know two things....which car you want and the payment you can afford. You like the $6,000 SUV and you have a Mustang to trade? Here's what I can do for you. For a low monthly payment of $275 for 42 months, you and yours will be driving that SUV this Pennsylvania winter. Have fun. That's pretty much how it works although hopefully the deal that you get would be a little better than the one I quoted.

    The previous advice about hanging onto the car you have is the best, but if you are deadset on trading, just about any dealer can make it happen.
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    VIP Member Array Guns and more's Avatar
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    This goes against my normal advice and rules of making a major purchase, but you may want to consider buying new.
    A guy who is upside down in a $6000 car doesn't need a $25000 car. All he will be doing is kicking the can down the road, and soon he'll be upside down in a $25000 loan.

    I'd say sell the car outright. You'll get way more than what the dealer will give you on the trade.
    Then buy the newer car with the cash.
    The dealer will want to give you a loan because the banks give a big kickback to dealers for making loans.

    Less debt is always better.

    And since you will be shopping for a used car, I'd look for a Toyota or Honda (sorry Detroit)
    that will last longer trouble free.

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    Distinguished Member Array Stubborn's Avatar
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    You shouldn't have anything to worry about. As long as you have average to above credit, the neg. equity will roll right into your next loan.
    Every $1000.00 dollars will raise your monthly payment @ $20.00 on average.
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    Quote Originally Posted by Guns and more View Post
    A guy who is upside down in a $6000 car doesn't need a $25000 car. All he will be doing is kicking the can down the road, and soon he'll be upside down in a $25000 loan.
    Agreed. My further advice was if he truly was stuck and needed to have another car.
    "Just blame Sixto"

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