incentives

[juggalo9er]

is it a bad idea to use incentives to cover negative equity in a vehicle?

2008 hhr owe 10,600 bla k book 6500 4.9%

lookinh at 2014 ford escape, appears to have 3460 in incentives

[Ragelog]

I am not sure incentives work that way in the end the loan will look like you're financing negative equity on the new loan I think.

Ideally not a good idea as it will result in the new vehicle having a loan in which more is owed than the vehicle is worth for longer. However sometimes people have to if they feel the need for a new vehicle.

Do you truly need a new vehicle now? Are you bringing a down payment?

I would say it all depends on the new terms you can be approved for. If you can get the negative equity on a zero % financing deal then that's not so bad assuming you are truly getting a good price on the new vehicle.

Not sure any of this helps but at least things to consider.

[sccredit]

In theory you are correct, the negative equity will be covered by the incentives.  However, anytime a car company runs a large incentive program the market value for the car being sold is driven down.  Therefore, your'e not really covering your negative equity.  Think of incentives as a price adjustment to make it fit the market value.

[Remember0]

sccredit hit it on the nail. The incentive drive down price so the negative equity doesn't disappear. That said, cars with a lot of incentives are helpful when you want to be able to roll in a lot of negative equity. Since lenders lend to a fraction of MSRP, the more incentives, the more negative equity that can be rolled in, typically.

[juggalo9er]

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@Remember0 wrote:

sccredit hit it on the nail. The incentive drive down price so the negative equity doesn't disappear. That said, cars with a lot of incentives are helpful when you want to be able to roll in a lot of negative equity. Since lenders lend to a fraction of MSRP, the more incentives, the more negative equity that can be rolled in, typically.

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i know i know your right on this....on the same note i would still have at least 1k negative equity! i am going to wait till my car is almost paid off and sell it private party thanks to all who posted.