@MostlyCloudy wrote:
I bought a brand new sportscar and carried over 11k negative equity with it. This resulted in a monthly payment of $560/month until 7/1/20. I am thinking about using my line of credit to pay off the negative equity and then selling it via private party. My LOC will cost me $180/month if I do this. The kicker is I also have 10k in credit card debt that is costing me $230/month. So basically I will have 2 maxed out credit lines but no more car payment. The total credit payments I would owe would be $410, for a net savings of $150/month plus reduced gas/insurance/maintenance costs. I estimate these to be roughly $50/month. I will of course be buying another car, only this time something sensible like a used clunker for 3k-4k in cash. So best case scenario I am saving $200/month to drive a piece of junk without any warranty. I am not in any dire straights, I just dont like the fact knowing I am so far upside-down on this car. It was a bad purchase and I feel the need to cleanse myself of it for being stupid.
But, am I being stupid going through all this hassle in the first place? Would I be better keeping an open LOC, or doing a balance transfer from the higher interest rate card to the LOC (which would save me $50/month by itself), keeping a beautiful reliable low mileage sports car under warranty? Obviously I will have the car paid off one day, and when I do I will be the original owner of a very well maintained car with the comfort of knowing its full driving history. This perhaps has its own intrinsic value.
The $200/month savings would just go towards groceries and other menial things. This isnt some life changing savings opportunity for me here.
^^^The one really good thing about this purchase is that you recognize it wasn't the wise thing to do (now you recognize it). Most of us have a similar purchase somewhere in our background. If not a car, then a house or some other not quite wise thing to do at that particular moment.
Learn from this purchase.
$11k upside down is huge especially on a depreciating asset.
If it were me, I would be getting rid of the vehicle ASAP by selling it and paying off the negative equity with the LOC if that was the only access I had to additional funds. I would try not to max out the line though. That could create other issues for you. This is your decision. It's a tough one to make, but better to take control of your finances while you can, rather than waiting until you are in a bind. JMO.
