Major negative equity / upside down

[sccredit]

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@Dj4Money wrote:

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@sccredit wrote:

When trading vehicles on a regular basis there comes a time when you have to suck it up and deal with one of two options -

Option 1 - Suck it up until the vehicle is paid off

Option 2 - Write a big fat check

I've been in both scenarios, neither is a good one.  

Unfortunately most finance companies have advance guidelines - say 120% LTV.  In order to comply with that and bury $10k of negative equity you would have to buy a $50k vehicle, put down 100% of TT&L and then carry the $10k.

You could try a lease but even then I'd almost guaranty that you'd have to write a big check.  

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 Wait, how did you do that?

  I have to bury $4093. I have since re-fi'ed my current car so the pay off will be lower, therefore reducing the negative balance. How would I calulate that properly? 

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Take the blue book of the car (most financial institutions will use NADA retail) times 1.2 (120%), that will tell you your max loan amount on a 120% LTV lender

[Dj4Money]

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@sccredit wrote:

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@Dj4Money wrote:

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@sccredit wrote:

When trading vehicles on a regular basis there comes a time when you have to suck it up and deal with one of two options -

Option 1 - Suck it up until the vehicle is paid off

Option 2 - Write a big fat check

I've been in both scenarios, neither is a good one.  

Unfortunately most finance companies have advance guidelines - say 120% LTV.  In order to comply with that and bury $10k of negative equity you would have to buy a $50k vehicle, put down 100% of TT&L and then carry the $10k.

You could try a lease but even then I'd almost guaranty that you'd have to write a big check.  

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 Wait, how did you do that?

  I have to bury $4093. I have since re-fi'ed my current car so the pay off will be lower, therefore reducing the negative balance. How would I calulate that properly? 

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Take the blue book of the car (most financial institutions will use NADA retail) times 1.2 (120%), that will tell you your max loan amount on a 120% LTV lender

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 Actually I mean -

 You told the OP he had to buy a $50K car to bury $10,000 in negative balance. How did you come to that conclusion?

[Anonymous]

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@ScottL wrote:

Before I get lectured, I know I made a mistake. But I want to learn from this mistake and never do it again.

About 2 years ago I bought a car from CarMax. Was trying to find someone smaller with better gas mileage and get out of my big truck since I drive alot of miles.  So I bought a little Lexus, had it only about 6 months and regreted it from the first week.  Although I saved alot on gas, it was just too small. I have 3 kids and it just never worked out. So on an impulse, i went down and traded it in for an SUV with 3rd row seats.  At the time, I was upside down on the car about $4500 that was rolled over.  In an effort to keep my payments affordable, I had to get something a little older with higher miles. So I got a 2007 Honda Pilot.  for about $12k.  Then once TTL, negative equity was rolled in, I financed about 16-17k I believe.

Its now been 13 months since I bought the Pilot. And although it served its purpose and got me out of the small car. I am beginning to hate it. Recently I have had to replace a few things and its broken down twice because of radiator and something with throttle body.  I have 140k miles on it now and afraid things will only continue to go out. Not to mention, i really regret not having a truck.

That said, I went to dealership over the weekend and they will only give me $4k for the Honda. Which means, I am upside down about $10-$11k!!!! 

Other than just keep it for a few more years, what are my options? Is there anyway to fix this or get out of this without me forking over $10,000?  I do not have that even if I wanted to.

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Get GAP insurance and drive the car off a cliff.  But in all seriousness, you need to just suck it up and pay it off.  It's not the nicest, but it works.

[Anonymous]

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@Anonymous wrote:

The base clean retail on that vehicle at NADA is about 10K at that mileage, so that dealer lowballed you, but they will always do that. 

If you have cash to cover some of the difference, you can probably private sell it, pay the difference, and then go in and get a car with no negative equity. How's your cash flow situation? 

Your only other option is make large payments to get out of it more quickly then trade it. You'll get a better trade value when you don't owe money on it. 

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Are you kidding?  OP is not a retail establishment selling a car, he's a private party owner trying to trade it in.  I was actually very surprised he got $4k.  After reconditioning and maintenance, the dealer would be in that vehicle deep.  Reality is nobody buys for full retail therefore no dealer will give full trade value.

[sccredit]

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@Dj4Money wrote:

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@sccredit wrote:

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@Dj4Money wrote:

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@sccredit wrote:

When trading vehicles on a regular basis there comes a time when you have to suck it up and deal with one of two options -

Option 1 - Suck it up until the vehicle is paid off

Option 2 - Write a big fat check

I've been in both scenarios, neither is a good one.  

Unfortunately most finance companies have advance guidelines - say 120% LTV.  In order to comply with that and bury $10k of negative equity you would have to buy a $50k vehicle, put down 100% of TT&L and then carry the $10k.

You could try a lease but even then I'd almost guaranty that you'd have to write a big check.  

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 Wait, how did you do that?

  I have to bury $4093. I have since re-fi'ed my current car so the pay off will be lower, therefore reducing the negative balance. How would I calulate that properly? 

---

Take the blue book of the car (most financial institutions will use NADA retail) times 1.2 (120%), that will tell you your max loan amount on a 120% LTV lender

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 Actually I mean -

 You told the OP he had to buy a $50K car to bury $10,000 in negative balance. How did you come to that conclusion?

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If a lender is going to advance 120% LTV OP has to buy a vehicle WORTH $50k to bury $10k.  Granted OP can get a deep discount on something but as a general rule a 120% LTV would take a $50k car to bury $10k in negative equity.  OP can go look at a $30k car with deep discounts but the chances that a financial institution would allow OP to bury $10k into something cheaper is slim to none. 

[Dj4Money]

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@sccredit wrote:

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@Dj4Money wrote:

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@sccredit wrote:

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@Dj4Money wrote:

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@sccredit wrote:

When trading vehicles on a regular basis there comes a time when you have to suck it up and deal with one of two options -

Option 1 - Suck it up until the vehicle is paid off

Option 2 - Write a big fat check

I've been in both scenarios, neither is a good one.  

Unfortunately most finance companies have advance guidelines - say 120% LTV.  In order to comply with that and bury $10k of negative equity you would have to buy a $50k vehicle, put down 100% of TT&L and then carry the $10k.

You could try a lease but even then I'd almost guaranty that you'd have to write a big check.  

---

 Wait, how did you do that?

  I have to bury $4093. I have since re-fi'ed my current car so the pay off will be lower, therefore reducing the negative balance. How would I calulate that properly? 

---

Take the blue book of the car (most financial institutions will use NADA retail) times 1.2 (120%), that will tell you your max loan amount on a 120% LTV lender

---

 Actually I mean -

 You told the OP he had to buy a $50K car to bury $10,000 in negative balance. How did you come to that conclusion?

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If a lender is going to advance 120% LTV OP has to buy a vehicle WORTH $50k to bury $10k.  Granted OP can get a deep discount on something but as a general rule a 120% LTV would take a $50k car to bury $10k in negative equity.  OP can go look at a $30k car with deep discounts but the chances that a financial institution would allow OP to bury $10k into something cheaper is slim to none. 

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 So basically what you are saying is that a car/truck/suv that cosst $50K would have enough margin in it that a dealer could discount it by $10,000 without rolling it into the loan correct?

 I owe roughly $4000 in my car, so I would need to get something in the $40K range to bury my negative balance? There's a $2,000 rebate on the Dodge Charger R/T....

[Hoya08]

In order for the OP to roll $10k negative equity into a new loan, the new vehicle has to have a minimum $50k value/MSRP. Tacking on the negative equity reaches the 120% LTV threshold, in which the loan will cover the entire negative equity.

In Dj4Money’s scenario, you’d require a minimum $20k value/MSRP vehicle to be within the 120% LTV guideline once the $4k negative equity is rolled in.

In both instances, you’d have to pay TTL with cash to stay within 120% LTV.

[sccredit]

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@Hoya08 wrote:

In order for the OP to roll $10k negative equity into a new loan, the new vehicle has to have a minimum $50k value/MSRP. Tacking on the negative equity reaches the 120% LTV threshold, in which the loan will cover the entire negative equity.

In Dj4Money’s scenario, you’d require a minimum $20k value/MSRP vehicle to be within the 120% LTV guideline once the $4k negative equity is rolled in.

In both instances, you’d have to pay TTL with cash to stay within 120% LTV.

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Exactly

[Dj4Money]

 Okay the Focus ST qualifies easy it's $25K for the base car (ST1). TTL is $2,562. If I purcahse the car out of state, I can avoid paying taxes up front. Selling at invoice saves $1644 and the current rebate is $1,000 and I have another $1,000 in rebates available to me.

 A base Fiesta ST is $21,740 but can be easily had for much less than that.

 IMHO both fit the LTV of under 120%  If your saying I MUST pay TTL it's only a little more to get the Focus ST.

[Hoya08]

Per NADA, a base 2007 Honda Pilot EX 2WD with approx 140k miles is valued around 10k (retail).  The average trade-in is around 6.8k; the deal definitely low balled you.

Have you considered selling it back to CARMAX?  In my experience, their buy-it-now offers are usually right at NADA tade-in.  If this is possible, it'll reduce you're negative equity from 10k-11k to 7.2k-8.2k.