How to be Vehicle Smart? Keep or Trade In

raine22 · ‎11-19-2010

We currently have three vehicles:

2004 Jeep Rubicon - Purchased May 2008 for $20,876.75 (took a $5,000 hit on Dodge Truck trade-in up-side down loan) Balance owed $14,509. Payment $430.23 (13.99% int)

2004 Chevrolet 3500 4x4 Dually - Purchased July 2010 along with a 2000 5th Wheel Camper financed loan for $15,000 for the 2. Balance owed approx $12,800 (credit union could split out difference from camper from amount they give us on trade-in ie. $10,000 trade in to pay off truck and leave balance of loan for camper which could pay off quickly). Payment $489.10.

2007 Jeep Grand Cherokee - Purchased Feb 2010 for $15,000. Balance owed $7,445. Payment $168.00.

We are vehicle payment poor for a total of $1,250.09/mo. (includes full coverage insurance amount on all 3 vehicles) I haven't made the best decisions on car loans in the past. Obviously we are in good shape on the 2007 Jeep which I drive to and from work low mileage.

Would it make sense to trade in the 2004 Rubicon and the 2004 Chevy $919.33/ mo plus insurance on a "new" 2010 Ford F350 $32,000 (extra truck in order to pull our 5th wheel camper without going into a Dually). If we could keep our payment below $600/mo it would help our cash flow as well as getting us out of the high interest loan on the Jeep Ruibcon which has been upside down depending on what they will give us on trade in. Of course then with some free cash we could get credit cards paid off and eventually make a larger payment on the truck loan which would pay it down faster if we opt for 6 year loan terms.

The only other option I see is keeping both vehicles until paid off in 2014 (jeep) and 2013 (chevy).

Serious dilemma! I don't want to make another stupid vehicle decision.

Thank you in advance for any advice!!.

Anonymous · ‎11-21-2010

Why do you have 3 vehicles?

Why do you need a camper with towing?

Honestly if you are that poor for cash you may need to just make some serious lifestyle choices and batten down the money.

If trading out will consolidate your payments and be livable do it, but you need to understand how you got his way

raine22 · ‎11-22-2010

"cash poor" was basically just a phrase for considering what we had going out on a monthly basis on auto loans. We really do not need 3 vehicles other than the fact that we recently bought the truck and 5th wheel camper as a package. I do want the camper and now am only considering a remedy to having 3 vehicles and consolidating so that we are back down to 2.

At the time, we thought we'd keep the Jeep Rubicon forever, it's a "fun summertime" vehicle it just doesn't seem to be most logical decision for obvious reasons. I want to build a new home in the spring and would much prefer the extra cash on hand for other necessities. I guess I was just concerned over taking a hit on trade in values when purchasing a new truck even though I know it would be a new vehicle and lower monthly payment and of course better interest rate over the long run. We "do" need a truck that will pull the 5th wheel camper.

The financing will actually be done through a credit union. They always seems to price the vehicles differently when they know you have a trade in much less if you have two vehicles to work into the deal. I just wanted to be sure I knew what I was doing making the decision to do this. I've looked up the blue book values on trade-in so that I have an idea of what the vehicle values are and I'm not real sure how firm you can be sticking to those numbers.

Anonymous · ‎11-22-2010

Hi raine22,

How do your current balances weigh in against the blue book on those two vehicles?

And have you considered selling the vehicles rather than trading them in?

Creditaddict · ‎11-22-2010

Doing a quick search, Ford is currently offering 6.9 on 72 months... not sure if they have even lower if you go 60 months... but keep that in mind when you are looking to finance at credit union if they can't beat that rate. If you don't tack on to much negative equity from the jeep and other car selling or trading in and can qualify for a much lower rate then I think it would be good option.

raine22 · ‎11-22-2010

Hi beamMEup,

Looking at Blue Book if I'm doing the options right it looks like trade in on jeep would be appox. $12,000 (retail for over $16,000). If we'd get $12,000 on it for trade-in then we would be looking at a negative equity of $2,692. (back to the $5,000 negative we took on this loan at an interest rate of 13.99% ..yes stupid)

Looking at Blue Book on the truck which I incorrectly typed as a 2004, it's actually a 1999 Chevy Silverado 4x4 dually, it looks like top trade-in would be around $8,000. The kicker on this is we took out a $15,000 loan thru credit union for 3 year terms and financed the truck as well as a 2000 5th Wheel Camper which has a value of $10,000.

Considering the two vehicles only that would be a total trade-in value of $20,000 and to pay both loans off in full which would release the camper title (if credit union is willing to do this I still have to check) we would have a negative $7,885 but clear title on the camper. The credit union is currently offering 3.99% financing on new vehicles. We are looking at a 2010 Ford F150 that dealer is offering $8,000 off MSRP incentive which would make up for the negative equity on the loan amount which it would seem we would still be able to get it financed without being upside down on the vehicle loan. It seems to make sense to me (I think) to get out of negative equity on a newer vehicle which in turn allows us to save approximately $400/mo in payments as well as get rid of the high interest loan on the jeep. Also, only be paying insurance on two vehicles rather than 3.

Creditaddict · ‎11-22-2010

@raine22 wrote:
Hi beamMEup,

Looking at Blue Book if I'm doing the options right it looks like trade in on jeep would be appox. $12,000 (retail for over $16,000). If we'd get $12,000 on it for trade-in then we would be looking at a negative equity of $2,692. (back to the $5,000 negative we took on this loan at an interest rate of 13.99% ..yes stupid)

Looking at Blue Book on the truck which I incorrectly typed as a 2004, it's actually a 1999 Chevy Silverado 4x4 dually, it looks like top trade-in would be around $8,000. The kicker on this is we took out a $15,000 loan thru credit union for 3 year terms and financed the truck as well as a 2000 5th Wheel Camper which has a value of $10,000.

Considering the two vehicles only that would be a total trade-in value of $20,000 and to pay both loans off in full which would release the camper title (if credit union is willing to do this I still have to check) we would have a negative $7,885 but clear title on the camper. The credit union is currently offering 3.99% financing on new vehicles. We are looking at a 2010 Ford F150 that dealer is offering $8,000 off MSRP incentive which would make up for the negative equity on the loan amount which it would seem we would still be able to get it financed without being upside down on the vehicle loan. It seems to make sense to me (I think) to get out of negative equity on a newer vehicle which in turn allows us to save approximately $400/mo in payments as well as get rid of the high interest loan on the jeep. Also, only be paying insurance on two vehicles rather than 3.

+1 Sounds good to me

raine22 · ‎11-22-2010

@Creditaddict wrote:
Doing a quick search, Ford is currently offering 6.9 on 72 months... not sure if they have even lower if you go 60 months... but keep that in mind when you are looking to finance at credit union if they can't beat that rate. If you don't tack on to much negative equity from the jeep and other car selling or trading in and can qualify for a much lower rate then I think it would be good option.
Thank you for your response and taking the time to do a search.
@Our credit union is offering 3.99 on new vehicle loans, unless they are only doing that on 2011 models, I do need to clarify. Otherwise, even 6.9 percent for 72 months would still be a much better deal than we currently have on the Jeep @ 13.99%.
I just don't trust myself on vehicle loans, too many bad decisions in the past and I wanted to hear opinions from people much smarter than myself here on the FICO boards!! I appreciate your answer.

mross1080 · ‎11-22-2010

Not to be negative about your plan but i've traded in MANY a car and its very hard to get close to KBB trade in value. The last car I traded in was perfect there was nothing wrong with it showroom every deliver that checked it out put it in at a 10 ( I had 10 dealers check it out) Not a single dealer came in at KBB. The best I could get was 1k under. I am an extremely difficult customer too.

Creditaddict · ‎11-22-2010

@mross1080 wrote:
Not to be negative about your plan but i've traded in MANY a car and its very hard to get close to KBB trade in value. The last car I traded in was perfect there was nothing wrong with it showroom every deliver that checked it out put it in at a 10 ( I had 10 dealers check it out) Not a single dealer came in at KBB. The best I could get was 1k under. I am an extremely difficult customer too.

True, you need to get the Black Book value, that's what dealerships use almost always