topic Re: Bizarre situation with new car, need help! in Auto Loans

Bizarre situation with new car, need help!

wntrwhte2 — Tue, 28 Feb 2012 14:19:32 GMT

So, last june I bought a CPO Lexus IS250 (2008 model, 32k miles). On paper, I paid cash-- I borrowed the money from a family member, because as a first time buyer I wasn't comfortable with the interest rates I was getting offered. The loan through the family member is at 4%, and my payment is $413.20 a month, purchase price 27800, amount financed $23k.

I am having issues with the car and am looking to get out of it. Unfortunately, the best trade in value I've been able to get out of a dealership is $20k, about what I owe ($20,100 payoff).

Right now, I'm looking at a new Kia Rio or Ford Focus. If I trade the car in, I get a sales tax benefit, since in Massachusetts you only pay sales tax on the difference between the trade in and the purchase price. If I sell it privately, I risk not being able to sell it for what I owe on it.

Does anyone see any way short of doing an even trade that I can relieve myself of a loan that on paper, does not exist, and finance a new car for roughly the same payment and rate?

If I can't, then I will trade it in and lose a little $$. Ideally, I would like to finance a new car with about $1000 down, finance amount no more than $23k like before, on a new 60-month loan at no more than 4%.

FICOs are 700+ (720 ranges), income $50k, CC util 13% ($40k+ available credit), DTI is currently ($202 payments + $450 rent) 15.6%. NO previous auto or mortgage, only student loans, CCs, and 1 installment loan paid off in 2007 for $4000.

Can I get a deal done, and can I sell my car to someplace like Carmax for what I owe?

Re: Bizarre situation with new car, need help!

pizzadude — Tue, 28 Feb 2012 14:24:27 GMT

wntrwhte2 wrote:
So, last june I bought a CPO Lexus IS250 (2008 model, 32k miles). On paper, I paid cash-- I borrowed the money from a family member, because as a first time buyer I wasn't comfortable with the interest rates I was getting offered. The loan through the family member is at 4%, and my payment is $413.20 a month, purchase price 27800, amount financed $23k.

I am having issues with the car and am looking to get out of it. Unfortunately, the best trade in value I've been able to get out of a dealership is $20k, about what I owe ($20,100 payoff).

Right now, I'm looking at a new Kia Rio or Ford Focus. If I trade the car in, I get a sales tax benefit, since in Massachusetts you only pay sales tax on the difference between the trade in and the purchase price. If I sell it privately, I risk not being able to sell it for what I owe on it.

Does anyone see any way short of doing an even trade that I can relieve myself of a loan that on paper, does not exist, and finance a new car for roughly the same payment and rate?

If I can't, then I will trade it in and lose a little $$. Ideally, I would like to finance a new car with about $1000 down, finance amount no more than $23k like before, on a new 60-month loan at no more than 4%.

FICOs are 700+ (720 ranges), income $50k, CC util 13% ($40k+ available credit), DTI is currently ($202 payments + $450 rent) 15.6%. NO previous auto or mortgage, only student loans, CCs, and 1 installment loan paid off in 2007 for $4000.

Can I get a deal done, and can I sell my car to someplace like Carmax for what I owe?

I think that you're going to have the same problem that you had last June in terms of getting an interest rate that you like. Since you have absolutely no auto loan accounts on your credit reports it is riskier to lend money and it going to drive up your interest rates.

Re: Bizarre situation with new car, need help!

wntrwhte2 — Tue, 28 Feb 2012 14:33:16 GMT

I understand that I need to pay more, but 4% is substantially above the advertised promo rates of 0%, 0.9%, and 1.9%, as much as double those rates.

So I still won't get it despite good income, DTI, and a credit history older than 8 years with high credit limits? that seems a bit silly.

Re: Bizarre situation with new car, need help!

StartingOver10 — Tue, 28 Feb 2012 14:38:03 GMT

Carmax will give you a firm purchase price that is good for 7 days. Naturally they don't pay retail for the vehicle.

Normally, if you sell it on your own, you should be able to get a much higher amount than with Carmax. Have you checked KBB or NADA values to see what the value is based on condition and milage?

I don't understand what you mean when you said that the loan doesn't exist on paper. Do you mean that it is a verbal agreement for repayment to your family member and not a written note? Or that a lien hasn't been recorded against the vehicle title? If there is no official lien, then there could be an issue with trading the vehicle when it comes to paying off your relative. I don't think trading is the best option for you. Naturally, you want to make this a smooth for you and your relative (and the new purchase) as possible.

Generally you get the most money for your vehicle in a private sale. The buyer will have to pay cash anyway so it will be easy to pay off your relative. Hopefully the value of the vehicle is more than the outstanding balance so you get enough for a down payment. You are in a much better position when you split the sale of your vehicle from the purchase of the new vehicle anyway. You get more for the sale and pay less on the purchase side. Trading is not the way to go.

To finance your new vehicle go to a CU. They give the best rates for new car buyers.

Re: Bizarre situation with new car, need help!

pizzadude — Tue, 28 Feb 2012 14:38:58 GMT

wntrwhte2 wrote:
I understand that I need to pay more, but 4% is substantially above the advertised promo rates of 0%, 0.9%, and 1.9%, as much as double those rates.

So I still won't get it despite good income, DTI, and a credit history older than 8 years with high credit limits? that seems a bit silly.

What rates were you offered last summer ? Obviously they were higher than 4%, right ?

Re: Bizarre situation with new car, need help!

wntrwhte2 — Tue, 28 Feb 2012 14:53:10 GMT

they were 6-8% but I think that had something to do with the vehicles I was looking at buying. There were no good captive offers from Lexus at the time.

NADA on the car in very good condition (which it is) is $24k. KBB lists it at 22500 and Black Book at the low for average is $21,100. Only damage to the vehicle is some curb rash on the rims that it actually came to me with.

Dealers are showing me manheim reports showing a selling price of $19875 at auction, which doesn't agree with black book and that is supposed to be auction price. If I can get carmax to give me $20k, I will start over and pay off this loan. if I can't, I will trade it in and throw in the cash to keep my current loan.

When I say the loan doesn't exist, I mean that I hold the title, there is no note, and the vehicle is registered solely to me. On paper, I paid cash for it. The loan holder is my mom, and she will let me trade the car and carry the loan to a new car if I want to, but I was hoping to get a better deal on a newer car with a "real" car loan.

Re: Bizarre situation with new car, need help!

webhopper — Wed, 29 Feb 2012 21:14:19 GMT

Your family member who loaned you the money should file a lien against the car at the title company... most likely you will both have to go to the DMV or Title Agency to do this. Once the lien is registered against the car, you should be ready and willing to trade it in, and tell the prospective dealership about the lien holder, and give him your family members contact telephone number...

That way your family member gets paid, and you get a new car and the dealership gets a trade-in.

Re: Bizarre situation with new car, need help!

wntrwhte2 — Wed, 29 Feb 2012 23:49:03 GMT

I've solved the issue.

I'll be selling the current vehicle to Carmax and leasing a new Fiesta. No issues.

Re: Bizarre situation with new car, need help!

webhopper — Sat, 03 Mar 2012 01:37:38 GMT

wntrwhte2 wrote:
I've solved the issue.

I'll be selling the current vehicle to Carmax and leasing a new Fiesta. No issues.

Quick question... why would you want to go from owning a car to basically renting a car? I'm really not a big fan of leases.

Re: Bizarre situation with new car, need help!

Watchmann — Sat, 03 Mar 2012 04:43:55 GMT

Glad you solved your issues, but what was wrong with the Lexus IS........they are solid, reliable cars. Carmax tends to use Mannheim data and not NADA, Kelly or other data bases, and Mannheim tends to be lower because they are auction prices among professional buyers and sellers.