Auto Loans

[daillengineer]

I owe 33,654.04 on a 2008 BMW 328i convertible. My payments are 655/month. I have no issues paying, but I would like to get a different car now that would have lower payments just so I can stop wasting all this money every month. Looks like it's worth 29,000, so I know im going to take a 5k bath, right?

[cdtotten]

You are pretty much correct.

When you go to trade in your car, they will give you a trade in value (which is of course flexible). If they offer, say $28,000 and you owe $34,000, then the $6k you are upside down will either have to be paid in cash as a down payment towards the new car, or it may be able to be financed in to your new loan (horrible idea). If I were you, I would  attempt to sell my car private party and see if you can do a little better than KBB. If not, then just pay the difference in cash when you buy your new car.

Rolling that kind of negative equity into a new loan will start a bad spiral. You will be even MORE upside down in your new car and will have the same issue down the road but worse. This is unfortunately the result of either a. trying to get out of a loan too early, b. financing a car for too long of a term, or c. not putting enough down to potentially offset the immediate depreciation (or a combo of all 3 likely).

Hope this helps!

[usmc58555]

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cdtotten wrote:

You are pretty much correct.

When you go to trade in your car, they will give you a trade in value (which is of course flexible). If they offer, say $28,000 and you owe $34,000, then the $6k you are upside down will either have to be paid in cash as a down payment towards the new car, or it may be able to be financed in to your new loan (horrible idea). If I were you, I would  attempt to sell my car private party and see if you can do a little better than KBB. If not, then just pay the difference in cash when you buy your new car.

Rolling that kind of negative equity into a new loan will start a bad spiral. You will be even MORE upside down in your new car and will have the same issue down the road but worse. This is unfortunately the result of either a. trying to get out of a loan too early, b. financing a car for too long of a term, or c. not putting enough down to potentially offset the immediate depreciation (or a combo of all 3 likely).

Hope this helps!

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Yes you will be held responsible for any monies owed based on the difference between what your vehicle is worth and what they are willing to give you for it.

1-you can look for vehicles that have high rebates to eat away at your negative equity- granted you may still have to bring money down.

2- couple rebates with preferred financing, and yes you will still have to bring money down but rolling the negative with 0% may make a more palatable payment.

in all probability you cannot roll as much negative equity into a used vehicle as you can a new.