Car Loan/BMW QUESTION

[Psylence]

Just left the Honda dealer who was selling a 2006 BMW 325xi, 74k miles for $15996. 3 owners, 2 of whom drove about 25K a piece.

My only concern is, is that there is no warranty (additional $2,000 or so added to total price). I was told going to BMW itself and getting a newer Pre-Owned Certified car and having them pay off my Jetta in full would be better. But I don't know how much of that is true, especially w/my scores being so low.

I have an $11,975 balance on my 2006 VW Jetta (60,300k) and was looking to trade.

I talked them into giving me $8800 for my trade and rolling over $3175.

Making the total car price w/fees, taxes, reg, etc around $19,800 give or take. 

They stated that my payments could be $377 a month w/ an 8% interest rate

It's still on the table due to the fact that it's Sunday and most banks are closed.

TU is 588

EQ is 625.

Here are some PRO's I figured:

66mos vs 72mos (currently at)

8% interest rate vs. 10% interest rate (currently at)

$377 payments vs. $332 payments (currently at)

Better resale value on a BWM vs a Jetta (only worth $7200 at most)

Is this a good deal that I should bite the bullet on to get out of the Jetta? Please help me with the CONS of this deal. 

[Anonymous]

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@Psylence wrote:

Just left the Honda dealer who was selling a 2006 BMW 325xi, 74k miles for $15996. 3 owners, 2 of whom drove about 25K a piece.

My only concern is, is that there is no warranty (additional $2,000 or so added to total price). I was told going to BMW itself and getting a newer Pre-Owned Certified car and having them pay off my Jetta in full would be better. But I don't know how much of that is true, especially w/my scores being so low.

I have an $11,975 balance on my 2006 VW Jetta (60,300k) and was looking to trade.

I talked them into giving me $8800 for my trade and rolling over $3175.

Making the total car price w/fees, taxes, reg, etc around $19,800 give or take. 

They stated that my payments could be $377 a month w/ an 8% interest rate

It's still on the table due to the fact that it's Sunday and most banks are closed.

TU is 588

EQ is 625.

Here are some PRO's I figured:

66mos vs 72mos (currently at)

8% interest rate vs. 10% interest rate (currently at)

$377 payments vs. $332 payments (currently at)

Better resale value on a BWM vs a Jetta (only worth $7200 at most)

Is this a good deal that I should bite the bullet on to get out of the Jetta? Please help me with the CONS of this deal. 

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Why do you need out of the Jetta?

Unless there is substantially something wrong with the Jetta there is no reason someone with your score should be trading in, especially for a higher payment.

And there is no reason you should be trading in for a BMW.

You have bad credit. Concepts like "resale value" are not important as you need to be focusing on driving your current car till it drops and rebuilding your credit, saving an emergencey fund and handling your debt. Resale Value is a concern on a trade in or potential sale. You need to be concerned about getting your house in order.

If you are really so set on being upset at your negative equity, start paying more then you are. pay the $377 a month on the Jetta, or even better start paying $500 a month on it to more closely match the increases in service cost and car insurance that the BMW will get you.

Again unless there is a serious issue with the Jetta you need to keep it.

[Anonymous]

i personally do not think that purchasing this bmw is a wise decision. you would be rolling in negative equity. when you are rolling in negative equity you are essentially paying for two cars when you only have one. also you are trading for a car that is not any newer than the one you are currently driving and it has more mileage and its going to cost a whole lot more to maintain than your vw. also bmw does not have better resale value than vw and i would only worry about resale value if you were buying new. if you really want a bmw try to get one that is cpo that is newer and with less mileage and make sure the dealer gives you what you owe for your trade in. btw i got rid of my 2006 bmw 325i that had every option and i was the only owner and the dealer gave me i think 12900 for it and that car was a piece. i would never own another bmw again unless i had money to blow. just my 2 cents. good luck!

[cdtotten]

Just to further what others have said, this is a terrible idea. You are in no financial position to do this. You want to trade in a car you are upside down on, to get another used car, with more mileage, that is more expensive to maintain/insure, and pay a higher monthly payment, when you FICO scores are already pretty low, and your new interest rate is not good by any stretch of the imagination.

Don't even consider it.... drive your car until it's paid off, then consider your next purchase. It is never a good idea to roll "negative equity" into a new loan.

[Travis-84]

One of the positives you listed is the lower interest rate on the BMW.  If you qualify for an 8% rate, couldn't you just as easily refinance the Jetta?

You also can afford the higher payments if you get the BMW, I assume.  If that is the case, why not just increase the size of the payment on the Jetta.

You also list higher resale value of the BMW, but I would bet its a wash, at best, once you figgure in higher gas, insurance, maintance, etc.

I agree with everybody else, keep the jetta.  If you could afford 377 a month on the BMW, then start paying it on the Jetta.  You could even pay 400.00 and still be ahead since you won't have increased bills.

The jetta may not be as fun or flashy, but its more economical.  From the sounds of it, you are putting very little down as well. 

[Psylence]

I agree with everyone. Just needed a second unbiased opinion from others who weren't family or "friends".

I am trying to refinance, but it is hard. I don't want to keep applying, getting denied + inquiry. I'll continue to stick with the Jetta and do as you all said, pay more. I can swing that, I know it'll eventually help in the long run.

Thank you for the reality check, we all NEED it sometimes!