Approval odds-Is this deal possible?

[Anonymous]

I got my eye on a used 2015 Ford Focus, saw it on-line for 11K, 25,000 miles. OTD would be about 12.5K. Do you think it is possible to roll 4,500 in neg equity into it? Or will Ford nix it and should I just try leftover new 2015 Fiesta's/Focus instead. As always,appreciate the input. 

[Anonymous]

With $4,500 negative equity, the deal is unlikely on an $11K car.

That's 154% LTV.  

If you intend to roll $4,500 into a new loan, your new (or used, new-to-you) vehicle will have to be worth $36,000 (at least $38,000 OTD) to cover the negative equity.  Once your $4500 was rolled in, for a total loan amount of $42,500 - your LTV would be 118%.  Most lenders will not look at anything over 120%.

You can undercut that by making a reduction of a couple thousand in your principal balance on the old car,  but that's going to depend on your being able to do that.  If you get your negative equity down to $2,500 or less, you can probably get a deal on a vehicle with a value of $20,000.

To buy an $11,000 car and finance the negative equity, your maximum to roll in is going to be $700 or less.  It's just a numbers thing.

[Anonymous]

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@Anonymous wrote:

With $4,500 negative equity, the deal is unlikely on an $11K car.

That's 154% LTV.  

If you intend to roll $4,500 into a new loan, your new (or used, new-to-you) vehicle will have to be worth $36,000 (at least $38,000 OTD) to cover the negative equity.  Once your $4500 was rolled in, for a total loan amount of $42,500 - your LTV would be 118%.  Most lenders will not look at anything over 120%.

You can undercut that by making a reduction of a couple thousand in your principal balance on the old car,  but that's going to depend on your being able to do that.  If you get your negative equity down to $2,500 or less, you can probably get a deal on a vehicle with a value of $20,000.

To buy an $11,000 car and finance the negative equity, your maximum to roll in is going to be $700 or less.  It's just a numbers thing.

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I appreciate the response but what you wrote about a new car price having to be xx amount of dollatrs is untrue. If the new car has significant rebates/discounts under MSRP you can easily roll negative equity into it. Ie: New car MSRP is 24K,you pay 19K, you can easily roll 4K into it. LTV on new cars is based on MSRP and on a 24K car you can finance up to 28,800 which is 120% LTV. 

The reason I ask is the car is a CPO and the KBB retail value is 13,608 and NADA retail value  is 13,950 and I am not sure how this would work on a used car. The car is priced well below retail due to the soft market for small cars and the real world pricing is different vs. guides on market conditions.  NADA trade value is 10,350. 

Thanks again. 

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

With $4,500 negative equity, the deal is unlikely on an $11K car.

That's 154% LTV.  

If you intend to roll $4,500 into a new loan, your new (or used, new-to-you) vehicle will have to be worth $36,000 (at least $38,000 OTD) to cover the negative equity.  Once your $4500 was rolled in, for a total loan amount of $42,500 - your LTV would be 118%.  Most lenders will not look at anything over 120%.

You can undercut that by making a reduction of a couple thousand in your principal balance on the old car,  but that's going to depend on your being able to do that.  If you get your negative equity down to $2,500 or less, you can probably get a deal on a vehicle with a value of $20,000.

To buy an $11,000 car and finance the negative equity, your maximum to roll in is going to be $700 or less.  It's just a numbers thing.

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I appreciate the response but what you wrote about a new car price having to be xx amount of dollatrs is untrue. If the new car has significant rebates/discounts under MSRP you can easily roll negative equity into it. Ie: New car MSRP is 24K,you pay 19K, you can easily roll 4K into it. LTV on new cars is based on MSRP and on a 24K car you can finance up to 28,800 which is 120% LTV. 

The reason I ask is the car is a CPO and the KBB retail value is 13,608 and NADA retail value  is 13,950 and I am not sure how this would work on a used car. The car is priced well below retail due to the soft market for small cars and the real world pricing is different vs. guides on market conditions.  NADA trade value is 10,350. 

Thanks again. 

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For that car, the bank would look at NADA loan value, not retail or trade.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

With $4,500 negative equity, the deal is unlikely on an $11K car.

That's 154% LTV.  

If you intend to roll $4,500 into a new loan, your new (or used, new-to-you) vehicle will have to be worth $36,000 (at least $38,000 OTD) to cover the negative equity.  Once your $4500 was rolled in, for a total loan amount of $42,500 - your LTV would be 118%.  Most lenders will not look at anything over 120%.

You can undercut that by making a reduction of a couple thousand in your principal balance on the old car,  but that's going to depend on your being able to do that.  If you get your negative equity down to $2,500 or less, you can probably get a deal on a vehicle with a value of $20,000.

To buy an $11,000 car and finance the negative equity, your maximum to roll in is going to be $700 or less.  It's just a numbers thing.

---

I appreciate the response but what you wrote about a new car price having to be xx amount of dollatrs is untrue. If the new car has significant rebates/discounts under MSRP you can easily roll negative equity into it. Ie: New car MSRP is 24K,you pay 19K, you can easily roll 4K into it. LTV on new cars is based on MSRP and on a 24K car you can finance up to 28,800 which is 120% LTV. 

The reason I ask is the car is a CPO and the KBB retail value is 13,608 and NADA retail value  is 13,950 and I am not sure how this would work on a used car. The car is priced well below retail due to the soft market for small cars and the real world pricing is different vs. guides on market conditions.  NADA trade value is 10,350. 

Thanks again. 

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For that car, the bank would look at NADA loan value, not retail or trade.

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Thanks. Never heard of  NADA loan value but it makes sense. Where can I find out that value? Or does anyone have any idea what that  might be?

[Anonymous]

U need to get an auto loan from capital one and see what's the max they will approve u for. So let's say they pre approve u for 20k for a car u can use that amount for the car and roll ur negative into it. Remember though that negative will always be there and u will be paying interest on it too and if u wanna trade it in again u will be even more negative

[Anonymous]

Loan values (sometimes called wholesale values) are not really published, mainly because it is an adjustment to the car's published trade-in value using an alogrithm created by each lender for their own use.  Different lenders will lend more or less on the same exact car. 

You can determine Capital One's loan values using their auto navigator, if you have had them preapprove you for financing (which you don't ultimately have to use if you don't want to or can beat the rate).  You can locate the car you are wanting to buy on their site (you can even search by VIN) and they will tell you what their rates are on the dealer's listed price.  You can then put in your -4500 and see what the numbers look like - if it tells you "cannot determine" then that means you've exceeded the maximum loan value on that car.  You can play with their calculator to try and find the highest amount they'll finance using that car as collateral (if they spit out a payment amount/interest rate on a certain price, then that price is within their range).

You cannot just assume that if Capital One preapproves you for $20K, you can buy that $11K car and add in $4500 in negative equity, just because the total is still less than $20K.  If the car is market-priced at $11K, you'll find its loan value near there, and its maximum finance amount at about 120% of that.  There is no MSRP for used cars.

[Anonymous]

Cap one won't approve me. Does Roadloans( I know, I know) have that feature? I would use dealer financing instead when purchasing but I would just do a pre-approval through them to play with that feature. 

[Anonymous]

Yes, even with above 820 scores, you will be stuck for a very long time.  Once you start this process it will snowball unless you stop it. And you can still suffer with that same old car for many years.

[Dj4Money]

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@Anonymous wrote:

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@Anonymous wrote:

With $4,500 negative equity, the deal is unlikely on an $11K car.

That's 154% LTV.  

If you intend to roll $4,500 into a new loan, your new (or used, new-to-you) vehicle will have to be worth $36,000 (at least $38,000 OTD) to cover the negative equity.  Once your $4500 was rolled in, for a total loan amount of $42,500 - your LTV would be 118%.  Most lenders will not look at anything over 120%.

You can undercut that by making a reduction of a couple thousand in your principal balance on the old car,  but that's going to depend on your being able to do that.  If you get your negative equity down to $2,500 or less, you can probably get a deal on a vehicle with a value of $20,000.

To buy an $11,000 car and finance the negative equity, your maximum to roll in is going to be $700 or less.  It's just a numbers thing.

---

I appreciate the response but what you wrote about a new car price having to be xx amount of dollatrs is untrue. If the new car has significant rebates/discounts under MSRP you can easily roll negative equity into it. Ie: New car MSRP is 24K,you pay 19K, you can easily roll 4K into it. LTV on new cars is based on MSRP and on a 24K car you can finance up to 28,800 which is 120% LTV. 

The reason I ask is the car is a CPO and the KBB retail value is 13,608 and NADA retail value  is 13,950 and I am not sure how this would work on a used car. The car is priced well below retail due to the soft market for small cars and the real world pricing is different vs. guides on market conditions.  NADA trade value is 10,350. 

Thanks again. 

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   This talk of LTV always throws me off. 

   $29,691 OTD + $4849 (Negative) = $34,540 (MSRP $31,715) = 108.91%

   Savings before rolling in the negative = $6497 after rebates

   If 100% is desired, then putting down $2825 makes it exactly $31,715 amount financed.

    That isn't the problem not getting low interest rates to go with it creates a problem.