Upside Down Car Loan

[fury1995]

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@MzOptimistic wrote:

I will look into it but I was told that the problem was definitely the $8,000 negative equity. I want out of that car lol. I have been paying almost $400 on time. I can afford a newer model car and I want one lol.

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Aside from your BK, what negatives to you have reporting?

Which auto lenders were IIB?

$400 / month is a pretty decent allowance to pay. Is this your max or can you afford more for a new car?

[MzOptimistic]

Fury1995,

I pay all my bills on time since my BK was discharged. I have no negatives reporting besides tickets that are in collection. Santander was IIB. I can afford $400 a month. No more than that.

[fury1995]

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@MzOptimistic wrote:

Fury1995,

I pay all my bills on time since my BK was discharged. I have no negatives reporting besides tickets that are in collection. Santander was IIB. I can afford $400 a month. No more than that.

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Ok that's good. 

Set goals..

Maybe something new but on the lesser expensive side. New means full warranty, no repair costs. Also, may have maintenance included which will help with your monthly budgeting.

I would try to stick with a captive lender finance company with the name of the brand in it  (like Ford Credit, Toyota Motor credit, Hyundai credit etc..) Captive lenders have incentives to make car loans to support the manufacturer of the cars they sell. they may be a little more lenient to make deals.

Look for something new but that has a large consumer rebate to help cover the negative equity. You have an estimated $8,000 (unknown source) .. DO NOT reveal this information when you go car shopping until AFTER your car is appraised..

Just have you car appraised as normal. You could even overstate the payoff to leave you with a little wiggle room / power at the end before the final part of the purchase. That may get the dealer to push a little higher on the trade in value to help out. If the dealer thinks you owe $12K instead of $10K.. they'll squeaze harder to make the deal.

Your negative equity is $8K - ish. That's about $60 - $80 of your next payment, depending on the loan so you need to find something around $20K with your trade in. I've seen new 2015 Ford Focus model with $8K off MSRP advertised for example.

[MzOptimistic]

Wow. Thank you Fury 1995. I appreciate all the information.

[bstone]

FYI, Fury, 8k of negative equity would be closers to $150/mo on a 72 month loan, maybe slightly more or less depending on rate.

However, based on what she has said she's only $6k upside down (owes $9k - $3k trade in = $6k), which is still close to $120/mo just to cover the negative equity.

If you want a $400 payment you're going to need to look at an OTD finance amount of around $20-22k, if you carry $6k of negative equity and factor in $2k for fees you're looking at a $10-12k car. And at that price range it's unlikely you'll be able to roll that much negative equity into the new loan.

[fury1995]

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@bstone wrote:
FYI, Fury, 8k of negative equity would be closers to $150/mo on a 72 month loan, maybe slightly more or less depending on rate.

However, based on what she has said she's only $6k upside down (owes $9k - $3k trade in = $6k), which is still close to $120/mo just to cover the negative equity.

If you want a $400 payment you're going to need to look at an OTD finance amount of around $20-22k, if you carry $6k of negative equity and factor in $2k for fees you're looking at a $10-12k car. And at that price range it's unlikely you'll be able to roll that much negative equity into the new loan.

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Yep.. dropped a 1 when I was doing math in my head. I meant to type $160 to $180 but I did festimate the amount to look at (in my head) correctly.

[MzOptimistic]

I guess I need to wait and save up so I can have a down payment also. 

[StartingOver10]

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@MzOptimistic wrote:

I guess I need to wait and save up so I can have a down payment also. 

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That is part of it, having savings for a down payment.

Also remember to check out CarMax or a similar type dealership that buys vehicles and can give you a quote right then and there. Usually with a trade they are going to give you the worst possible value on the trade in because it boosts their profit. That's how you ended up with $8k negative equity when the most it could be is $6k based on your post. 

Is the $9k what you paid for the vehicle or are you adding in interest? I ask that because I see posts all the time where people add in their total interest (paid over the life of the loan) and give the balance + their interest as the remaining due (which is not correct).  

If you have a $9k balance and you want out of the vehicle, this is what I would do:

• Get car detailed
• Go to Carmax and get quote to sell it to them so you have a number that is good for one week. This is for planning purposes.
• If you don't have the difference in savings so you can sell it to Carmax then work on a plan to come up with the funds (selling things around the house, making extra payments to the loan, getting a second job to save up more, whatever you can do to get the funds)

You won't have this issue the next time you buy because you will have proven you can make the payments after your Bk. Try not to trade this one in as it won't be an asset to you and will hurt your negotiations on the new vehicle. Read the stickies at the top on how to buy a vehicle. 

[cartwrna]

As others stated, buy a new car with a huge rebate! I did just that in June. Traded a 2014 Charger that was upside down for a 2015 Silverado 2500 that had a nearly 11k rebate, plus put 3k down of my own money. I now have some pretty good equity and a interest rate of 3% even I believe. The way that the dealership writes up the paperwork/contract it looks as if that rebate is part of your down payment.

[cartwrna]

Scratch what I said, I just saw where your max budget is $400 a month. You won't find a cheap enough car with a big enough rebate to cover that I wouldn't think. 9k for a 2002 Chevy Malibu seems extremely high (it's about a 3k car on Craigslist), no pun intended. As other poster said, are you sure your not looking at the total you will pay when all is said and done with interest? The way a contract is wrote up it shows the final amount you will pay when all is said and done over the life of the loan if you make the minimum payment principal+interest.