Should I trade in before negative equity??? ()

[Anonymous]

Hi all!

Mikewillis7 here

Had to remake my username unfrotunately because I forgot my previous one and seems like I'm locked out...

Thinking about something and wondering if anybody has been in a similar situation.

After finally getting approved for my auto-loan last year and a credit card last year. I started to garden as some users here suggested I should.

A full 6 months later and I have done nothing but make payments...

But I amrunning into a kind of self dilemma here, and don't know a better place to run to than here & am wondering if anybody has been in a similar situation.

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Is trading in the 2010 car I am financing for a 2013-2015 car - and adding on the difference onto my debt wise as supposed to; just keeping my 2010 car and it devalues to where I owe more than its market value?

If it weren't for my insufficient credit history at the POS I'd lease the vehichle but the dealer said I could not.

Would trading in this fashion be my best bet?

[SamsungHDTV]

Not wise. 

Everytime you buy and/or trading to a dealer - you're always losing money. 

Financially concious individuals will stick with their 2010.

[Anonymous]

Thanks for your reply

I see - yeah I did consider that.

Would selling the car now (since this is probably the highest value it will ever be)

and paying off the balance lower my credit score since i will be closing an account?

[Anonymous]

Also I forgot to add, what about selling to a third party private buyerr?

[Anonymous]

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@Anonymous wrote:

Thanks for your reply

I see - yeah I did consider that.

Would selling the car now (since this is probably the highest value it will ever be)

and paying off the balance lower my credit score since i will be closing an account?

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You didnt specify what the car is or how much you owe on it, so hard to give specific advice here.

Unless you are already upside down on the car, meaning you owe more than its worth, I would say its better to keep the 2010.

As an example, if you buy a 2015 car for 25k with zero down, you would finance it for something like 60 months.  After the 60 months, you would owe zero and the car would have some sort of value, lets say 10k.  It takes the biggest depreciation hit right after you drive it away from the dealer because its now a used car, so lets say its worth 21k after 3 months.   

If you say its never going to be worth more than it is now and trade it in again, you are just going to keep getting further behind with the negative equity.

Todays cars will easily make it for 200k miles with reasonable care.    So unless you know of something horribly wrong with your car that will be very expensive to repair, its better to keep it.

hth

[Anonymous]

It's a Camry which the average market value is around 10k

If I sell now I could maybe get 9k and just get a newer for 13-16k

As supposed to the car devaluing in 3 years to its lowest which for these sedans are usually 5-7k depending on packages.

To sum it all up , im not behind on payments or having problems. The car is still worth more than im paying but probably not for long.
I knew getting on that a car was a devaluing buy, but I guess the real question is whether it's wise if I'm trying to get the most juice out of my car now.

[StartingOver10]

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@Anonymous wrote:
It's a Camry which the average market value is around 10k

If I sell now I could maybe get 9k and just get a newer for 13-16k

As supposed to the car devaluing in 3 years to its lowest which for these sedans are usually 5-7k depending on packages.

To sum it all up , im not behind on payments or having problems. The car is still worth more than im paying but probably not for long.
I knew getting on that a car was a devaluing buy, but I guess the real question is whether it's wise if I'm trying to get the most juice out of my car now.

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The car dealer may quote you based on a average - but most use NADA or KBB and base it on condition and milage and age (year) and the features you have in your vehicle. Naturally a trade is worth much less because the dealer knows it is convenient. if you sell private party, the vehicle is worth closer to market value. There can be a large spread, depending upon the dealer and the private party. I just don't accept that everyone has an average vehicle. There is a tremendous varience in condition, milage and options. I would run away from a dealer that even tried to use 'average vehicle price' on me, but then again, I never trade. Trading puts the dealer in a position of power (for negotiation purposes).

I have sold a couple of my vehicles to CarMax when I don't feel like selling private party. I get more $$ than on any trade and less than selling private party.  At least get a quote from CarMax to see your value. The quote is good for 7 days. I don't buy at CarMax because they charge too much, but there is no obligation to buy from them if you sell them your vehicle.

Many dealers play the lowball game for your trade OR they will give you a decent price on the trade but a high price on the vehicle you are purchasing. Best to split up the transactions so you are just negotiating the purchase of the new(er) vehicle without messing with the trade in figures. It makes for a more transparent transaction and you end up with a better purchase IME.

[Anonymous]

If it were me trading in (especially to a dealer) for not losing equity would not be a suitable reason. Financially, the difference would be tacked on the new loan in terms of either monthly payment or length of the loan. NOT WORTH IT. But this is a personal choice.

My DH traded his Harley which was the top of the line and hated the bike! He ended up trading it and owed more than it was worth because he has always traded up before paying off each loan. He put $15,000 on a CC just to get out of it! Now he has a bike he loves and is not upside down in the loan, however he now owes $15,000 on a CC! Lesson learned. I was agreeable for him do it because it was making him miserable and this is his main source of transportation. Like I said, it's a personal choice, not a financially sound choice.

[Anonymous]

Thanks for both responses.

Appreciate it...

Right now I have to sit down and do some math. I am going to check out carmax and if not just trade down to get out of monthly payments until I can get the Rover I want.