need negative equity advice

[cns2002]

Hello all. I need sound advice and this forum has helped in my car buying process. I bought an suv 4yrs ago @ 17.99% interest rate and 72mos. Very bad idea but was desperate, had filed chap 7 bkruptcy, & just credit ignorant. Now today im upside down 8k in a truck only worth 3k and its dying on me so i need something else now. Ive been approved for a new Honda with 2k down to eat some neg equity but my question is should i go for it and get this neg equity gone or should i keep my car and try to sell it outright? Please go easy on me!

[CAnNY]

If your now in a position to get a great interest rate and they let you trade up, go for it. However, I would try to pay extra into the principle to help ease the negative equity you brought over to the new car. That's just my two cents. 

Good luck!

[StartingOver10]

What is that $3k, the trade in value? Or is it the blue book value.  It would be far better for you to sell it retail yourself then to trade. It might be tough now, but getting rid of the negative equity and not transferring it to the new purchase puts you in a much better negotiating position.

[cns2002]

Yes 3k is the actual value not trade in. And yes its very tough and frustrating to get out of such an ugly deal but lesson learned. And i think i will trade out for a new, reliable, yet valuable car. Thanks for your advice!

[Luscher]

maybe try and lease the new car instead? this way you could have pretty low payments, no money down, and could get a new car in 3 years if you wanted too, also don't have to worry about interest

[cns2002]

Im 7yrs post bankruptcy so i dont think leasing is an option for my credit. ;(

[StartingOver10]

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@cns2002 wrote:
Yes 3k is the actual value not trade in. And yes its very tough and frustrating to get out of such an ugly deal but lesson learned. And i think i will trade out for a new, reliable, yet valuable car. Thanks for your advice!

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Just don't accept the first interest rate the F&I guy gives you - unless it is a really good rate. You are 7 years post BK so you actually should be in the low single digits for interest on a used vehicle and I have seen others get zero percent on a new vehicle. Get your pre-approval through a CU before you go for the trade. The trade puts you in a slight disadvatage when negotiating so the more $$ you can put down to get rid of the negative equity, the better for you long term.

EDIT:  Don't lease. It is just the worst thing you can do when it comes to vehicles. I know others are proponets of it, but check the web for pro's and con's and you will see that dealers like it because they absolutely make the most money from a lease and you get nothing for it but a payment and the ability to use it for a limited period of time! JMO.

[cns2002]

Thank you for your honest opinion! My CUs interest isnt too great right now but i can refi with them later. And the dealer is offering single digit interest. But i agree to never lease! Complete waste of $ for something you dont own!

[Creditaddict]

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@cns2002 wrote:
@Anonymous all. I need sound advice and this forum has helped in my car buying process. I bought an suv 4yrs ago @ 17.99% interest rate and 72mos. Very bad idea but was desperate, had filed chap 7 bkruptcy, & just credit ignorant. Now today im upside down 8k in a truck only worth 3k and its dying on me so i need something else now. Ive been approved for a new Honda with 2k down to eat some neg equity but my question is should i go for it and get this neg equity gone or should i keep my car and try to sell it outright? Please go easy on me!

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If they will take the negative equity and you are cutting your interest rate way down I say that is the best way to go and then just see if you can pay a little extra as you go so that you can get under the auto value on the new loan before you get to 4 or 5 years and need or want to trade up again....

you probably would very easily qualify to lease if they are qualifying you to buy but I would much prefer to buy if you can afford it and are getting a good rate! that poster has it backwards for why I lease... I can't afford the payments of the car on regular financing or can't get regular financing!

[cns2002]

Hello all...im happy to report i did go with trading my car in and im the new owner of a 2013 honda accord coupe. 2k down to eat some neg equity plus 3k for my trade, extra 500 honda rebate & 499/mo @ 9% interest. I even negotiated gap insurance and a 6yr full warranty in for free! Payment is high but expected since i rolled in so much negative equity but thats the price you pay for going into bad car deals blind and paying for it later.