Quick question about trading in my car.... Please help me.?

[Anonymous]

Me and my mother basically got screwed 3 years ago (i didnt know what i know now) when we financed through a bank (dont say their name) at 18.2% interest on an auto loan that doesnt mature for another 3 years. So, we're talking 2005-2011 for an auto loan at 18.2%.

The car is a 2002 Ford Explorer XLT, which retailed at around $18,000 when we bought it. Now, I'm stuck paying 459 dollar monthly payments on a USED car that's 6 years old now. What are my options? we have about $17,000 or so dollars left to pay on the auto loan.

I tried to go to a credit union and get my auto loan refinanced, but he told me they cant refinance it at more than what it's worth (my car is valued at 10 grand right now) My auto loan from the bank has a buyout of 13 grand right now. Should i just try to trade it in at the dealer and plead with them to refinance my loan too? I mean, the montly payments are 459, we send 500 dollars to them every month and it's on TIME every month.

PLEASE SOMEONE HELP!! will the lender (dealer or credit union) look at my Perfect, and timely payments so far and say "Hey, you were able to make those high payments on time EVERY month, so you seem to have a handle on it"? Or will they just say fuk it?

[Anonymous]

You quote two numbers for the pay off amount. But regardless of what the pay off is, I am not sure if a CU or a bank will let you roll that much negative equity into a new loan. The captive finance companies however will let you roll the negative equity into a new car loan. But again that depends on the residual value of the new car you are buying sometimes up to 120% of the MSRP. I would not mention being upside down on your current vehicle as that negatively impacts your negotiation power. Expect about $1000 less than Edmunds TMV you see on line being offered for your current vehicle for the negotiations to start.

[MattH]

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@Anonymous wrote:
Me and my mother basically got screwed 3 years ago (i didnt know what i know now) when we financed through a bank (dont say their name) at 18.2% interest on an auto loan that doesnt mature for another 3 years. So, we're talking 2005-2011 for an auto loan at 18.2%.

The car is a 2002 Ford Explorer XLT, which retailed at around $18,000 when we bought it. Now, I'm stuck paying 459 dollar monthly payments on a USED car that's 6 years old now. What are my options? we have about $17,000 or so dollars left to pay on the auto loan.

I tried to go to a credit union and get my auto loan refinanced, but he told me they cant refinance it at more than what it's worth (my car is valued at 10 grand right now) My auto loan from the bank has a buyout of 13 grand right now. Should i just try to trade it in at the dealer and plead with them to refinance my loan too? I mean, the montly payments are 459, we send 500 dollars to them every month and it's on TIME every month.

PLEASE SOMEONE HELP!! will the lender (dealer or credit union) look at my Perfect, and timely payments so far and say "Hey, you were able to make those high payments on time EVERY month, so you seem to have a handle on it"? Or will they just say fuk it?

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Your best option now is find ways to cut other living expenses so you can pay much more than 500 dollars per month into that loan for a while. WAIT until you have built up some equity, and then buy a used car that costs NO MORE THAN FIVE TIMES the amount of cash plus equity you bring to the transaction. Do not buy a new car until you can bring at least 25% of its price in cash plus equity to the transaction, because a new car instantly drops in value the moment you buy it. Do not even consider starting off already upside-down on your next car, new or used.

And don't tell me you NEED to replace that 2002 model now. I myself am driving a 2000 Camry I bought in 2004 and plan to keep until maybe 2009. You may think it's expensive to maintain because some things will need to be done, but even several major repairs cost a lot less than a new car would.

PS: take a look at the calculators section on www.bankrate.com and check out auto loan calculator. Enter the numbers for your loan and click the Amortization Table button: you will see that by now you have already paid most of the interest you are going to pay on this loan, so by this point that high rate is mostly water under the bridge, it's really too late for a refi to do all that much good, just pay it off as quickly as possible.

High schools really should have a required class in personal finance in which they look closely at some realistic case studies before learning it the hard way.

Message Edited by MattH on 05-24-2008 12:44 PM

[Takunda1]

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lil_genuine2004 wrote:
Me and my mother basically got screwed 3 years ago (i didnt know what i know now) when we financed through a bank (dont say their name) at 18.2% interest on an auto loan that doesnt mature for another 3 years. So, we're talking 2005-2011 for an auto loan at 18.2%.

The car is a 2002 Ford Explorer XLT, which retailed at around $18,000 when we bought it. Now, I'm stuck paying 459 dollar monthly payments on a USED car that's 6 years old now. What are my options? we have about $17,000 or so dollars left to pay on the auto loan.

I tried to go to a credit union and get my auto loan refinanced, but he told me they cant refinance it at more than what it's worth (my car is valued at 10 grand right now) My auto loan from the bank has a buyout of 13 grand right now. Should i just try to trade it in at the dealer and plead with them to refinance my loan too? I mean, the montly payments are 459, we send 500 dollars to them every month and it's on TIME every month.

PLEASE SOMEONE HELP!! will the lender (dealer or credit union) look at my Perfect, and timely payments so far and say "Hey, you were able to make those high payments on time EVERY month, so you seem to have a handle on it"? Or will they just say fuk it?

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If you have a CC that has a good CL I would Balance Transfer , a percetage of the auto loan to a CC and refi, the remainder for a much lower rate. Most balance transfers for amex for example are a good 4.9% for the life of the balance transfer. At 18% thats just too much if you have good credit scores. This is a good move if you have no plans for any major financing in the near future, since the increase in your credit card balance may drop your score for a while, while you pay down the balance.

Message Edited by Takunda1 on 05-24-2008 03:23 PM

[nathan]

Your situation is very similar to mine. I bought my 2003 ford exdedition in 06 at 12%. after numerous attempts, navy fed agreed to ref for 9%. Penfed refused to ref because value is way down. i still owe 16k for it. Penfed approved me for 22k auto loan, but i can't even use it because one ford dealer was offering me 4k for trade in. i told them to kiss my $% and left. The penfed auto loan is at 4.25%. i was hoping to get even 10k for the trade in and roll the negative equity into another car. I just wanted to take advantage of the low interest rate. I have a blank check in hand but i dont know what to. one dealer adviced me to buy a very cheap car for like 4k or 5k. i do not think penfed would agree with such a deal. Do I have any other options? For now i am thinking of keeping the truck for like another year or two and try again. I just got approved for a 15k cc from pedfed and they are advertising bt at 2.99, can i ask to bt my auto balance or is it just for cc. if i can do that, i do not care about fico hit for now.

[Anonymous]

A lot of dealerships will roll up to $10K of an old loan onto a new one. But only on a new car. Even if you were to buy the cheapest new car out there (like $14K) and then roll in $8K of your old loan you are looking at more money financed then you currently owe. You would have to take out another 6 year loan and have roughly the same payments and still be stuck in the same rut you are now.

Find every extra penny you have left over each month and send it to the car. Once you have it paid down enough refinance it or roll in a lot less to a new car loan many years down the road when your current car actually needs to be replaced.

Sorry I was in a similar situation not long ago....so that is what I did.

[nathan]

You are right. i will just pay it down to about 9k and then trade it in. My only regret now is not being able to take advantage of the 4.25% interest rate. For those comtemplating to get a ford expedition or explorer, stay away from these trucks. they are worthless when you try to trade in.

[Anonymous]

THanks so much guys.... I really appreciate the feedback. I will just pay more on the loan each month, til my credit union can refinance at the buyout rate.