Q about auto loan, rolling over payoff to new car, can I use one loan to do this?

[Anonymous]

I hope I can explain this well!

My husband has a 2007 Ford Taurus, we owe 9K it is appraised at between $6-7K (low because it has miles on it, past rental car).  He is starting a small business and needs a truck. I myself would never want to trade a car before paying it off but he is in a special situation.  (PS this auto loan is with Cap1)

We both are early 700's ficos.  We have made all payments on time on the taurus, plus I have paid off two cars previous.

What I want to know, can I use a pre-approved loan for the whole price of rolling the payoff of first car, plus new (used) car, minus trade in value?  I know they can do this at the dealership but I would rather show up with a bank draft to do the whole transaction.

Reason I ask is we were getting ready to apply on Auto Traders site and the company they use stated in their req'mts you could only use their check for 1 car only, nothing else. 

Alternative would be to take the dealer's financing and then re-fi. 

[Anonymous]

This can be done.  The dealer where you are buying the truck will raise the price of the truck by 3000.  They will then give you 9000 on your trade in so that you can pay off your car.  The only thing that you have to be wary of is that most banks will not go over 120% of the value of the car that you are buying.  For example, if you are buying a truck that is valued at $10000 and the dealer is selling it to you at for the value (unlikely) then you would have a maximum of $2000 to roll in any TT&L, and negative equity (10k * 120% = 12k). In order to roll in 3k in negative equity, and (just a guess) 1k of TT&L, you will have to buy a truck worth 20k (20k * 120% = 24k).  The only thing that you have working in your favor is that you are buying a truck which you may be able to get from a dealer for below blue book value because they are tired of having them on the lot.  In summation, it can be done, but there is a little math that you need to do before you go out and look for a truck.

P.S.  I have heard that wells fargo does 150%, but I have also heard that you will pay a premium interest rate for it.

[Anonymous]

Thanks Drachen.

I had to read that twice but I think I actually got it the second time!

[MattH]

If you roll over the loan, you will then be even deeper underwater, which means an accident could be a financial disaster for you. Do you have "GAP" coverage? If you do not KNOW for certain you have it, you almost certainly do not. Standard insurance will NOT pay more than the market value of the vehicle, which means you can end up owing on a vehicle that no longer exists. Try very very very very very very very very very very very very very very very very very very very hard to find a way of paying off the negative equity as soon as possible.

And if you absolutely must roll over negative equity into a new loan, then check with your insurance agent about GAP coverage, it will cost more than regular insurance but the consequences of not doing so could be huge.