What would you do?

[Anonymous]

Car is 2008 KIa with 91K. Owe 7K to Satander at 18%; payment is 196 a month. KBB/Car max appraisal 3,200.  Car has had 2,200 in repairs last 10 months. Each time there is a repair parts are hard to find so the repairs cost more than using aftermarket parts., Refinaning the car seems impossible.  I am thinking of keeping the car until the 99K mile mark, about one more year. Figure the loan balance will be about 6K at that time. I will bring in 2K in cash to the deal and roll-in the remaining neg equity. I just don't want to have a loan on a car with no warranty; right now powertrain warranty is in effect. Looking at replacing it with a new Nissan Versa S plus model; my other car loan is at 8% and was taken out 6mo ago. Figuring I can get a rate of 6% next year, would you chuck the Kia?  

[Anonymous]

Why don't you make as large of payments as possible towards the principle to get out from underwater? You'll pay less interest and then can have a car to trade. 

Negative equity is almost always a bad idea, and keeps you out of better interest rates. 

[Anonymous]

I understand the evils of negative equity but I dont want to pay 300 to 400 a month to drive a car with 91k on it that is costing money to fix. I have better uses for that money;rather put it in my 401K. 

[Anonymous]

You think that's bad. My auto loan is @ 29%. My goal is to pay it off by March of 2016. Got the loan when I had 490-525 scores and tons of collections open. Would pay it off sooner but one of my girls just got braces I have to pay off.

[Anonymous]

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@Anonymous wrote:

I understand the evils of negative equity but I dont want to pay 300 to 400 a month to drive a car with 91k on it that is costing money to fix. I have better uses for that money;rather put it in my 401K. 

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Except in most cases, you're wiping out any 401K gains from losses to the interest you're payng. You only owe 7K, you can get that paid off very quicky. 

I also recommend you find a new mechanic, Kias are very cheap to repair and parts are plentiful. 

[trant3]

Everyone has different views regarding negative. With me, and especially if you're having car troubles currently, I would chuck it and absorb the negative equity while it still has value. I did the same exact thing and rolled the negative equity into a brand new lease. I plan on purchasing the vehicle at the end of the lease.

[Anonymous]

 My repairs have been a/c compressor and brake master cylinder,parts were pricey but labor was cheap. My car is a Rondo which is no longer in production. could explain having to use new parts ordered from Kia. Does anyone think it is very risky to have a small loan balance, say 6K by next year on  a 2008  Kia Rondo  withh 100K on it. No GAP ins as well.  Car looks a little aged but does still drive very well. Appreciating all input!!!   

[StartingOver10]

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@Anonymous wrote:

 My repairs have been a/c compressor and brake master cylinder,parts were pricey but labor was cheap. My car is a Rondo which is no longer in production. could explain having to use new parts ordered from Kia. Does anyone think it is very risky to have a small loan balance, say 6K by next year on  a 2008  Kia Rondo  withh 100K on it. No GAP ins as well.  Car looks a little aged but does still drive very well. Appreciating all input!!!   

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If I were in your shoes this is what I would do (and I actually am in a smilar situation except it is an 09 Toyota Venza with $4k owed and 91,300 miles): 

• Check current FICO scores - both FICO 8 scores and auto scores to see  exactly where I stood score-wise
• Take a lump sum out of savings and pay down the current vehicle to at least the trade in value or less so there is NO possibility of transferring negative equity to the new one
• Line up potential financing with either a credit union or bank (pre-approval) 
• Shop online for the next vehicle and spend several weeks/months negotiating the deal you want (in my case I refuse to trade, I will sell my vehicle separately)
• Once you have the deal worked out via email with competing dealerships, go in and test drive, have an independant mechanic check out the vehicle and purchase with third party financing

In your case you want to trade in your Rondo - I think it is a bad idea because you start the new deal off on a bad foot, but others like to trade in their old ones. Just be careful that the trade doesn't affect the deal you already worked out via email.  You can do this so it is to your advantage.

[Anonymous]

I dont have the cash to do so right now;   I have tried selling vehicles privately in the past and people were ridiculous offering less than dealer trade. Taking negative equity out of situation; would you keep or get rid of the car? Question is continue to pay 196.28 a month next year for 3 more years on a car with 100K on it or get rid of it and get a car with a warranty on it say for 250 to 275 a month range payment. Right now I will keep the car; decision time will be with 99K on it when powertrain warranty is due to be up. Thanks to all for the input. 

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@StartingOver10 wrote:

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@Anonymous wrote:

 My repairs have been a/c compressor and brake master cylinder,parts were pricey but labor was cheap. My car is a Rondo which is no longer in production. could explain having to use new parts ordered from Kia. Does anyone think it is very risky to have a small loan balance, say 6K by next year on  a 2008  Kia Rondo  withh 100K on it. No GAP ins as well.  Car looks a little aged but does still drive very well. Appreciating all input!!!   

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If I were in your shoes this is what I would do (and I actually am in a smilar situation except it is an 09 Toyota Venza with $4k owed and 91,300 miles): 

• Check current FICO scores - both FICO 8 scores and auto scores to see  exactly where I stood score-wise
• Take a lump sum out of savings and pay down the current vehicle to at least the trade in value or less so there is NO possibility of transferring negative equity to the new one
• Line up potential financing with either a credit union or bank (pre-approval) 
• Shop online for the next vehicle and spend several weeks/months negotiating the deal you want (in my case I refuse to trade, I will sell my vehicle separately)
• Once you have the deal worked out via email with competing dealerships, go in and test drive, have an independant mechanic check out the vehicle and purchase with third party financing

In your case you want to trade in your Rondo - I think it is a bad idea because you start the new deal off on a bad foot, but others like to trade in their old ones. Just be careful that the trade doesn't affect the deal you already worked out via email.  You can do this so it is to your advantage.

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[StartingOver10]

I have also had success with selling to CarMax - they offer more and it is overall less hassel. Plus you don't have to worry if your vehicle isn't tip top shape, they buy as is. Usually it is easy. At least check it out for pricing to see if it would work and not be upside down for you. Their quote is good for 7 days.