Trade in upside down car with cash or pay off CC

[jetsfan2013]

Didn't see another forum to put this ? at...

I am approx 3700 upside down on my current car, and with my family growing, I need to scale down accordingly and change cars. I have 59 months left on my current car note, which I could trade in and add approx 3k to get out of it, then buy a used camry or accord for 12-14k and pay it off in 36 mo. Monthly savings on loan payment would be 115 mo but paid off car 2 years faster.

Or..

I could use the cash I would give to make up the deficency balance on my car and pay down my 2 CCs that are above 90% Util.

[Anonymous]

Visit multiple places or look at selling it yourself.

Try different dealers

[ojefferyo]

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@jetsfan2013 wrote:

Didn't see another forum to put this ? at...

I am approx 3700 upside down on my current car, and with my family growing, I need to scale down accordingly and change cars. I have 59 months left on my current car note, which I could trade in and add approx 3k to get out of it, then buy a used camry or accord for 12-14k and pay it off in 36 mo. Monthly savings on loan payment would be 115 mo but paid off car 2 years faster.

Or..

I could use the cash I would give to make up the deficency balance on my car and pay down my 2 CCs that are above 90% Util.

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If you are in the red with the car I would get rid of that first. It will just get deeper into the red the longer you keep it. 

[Anonymous]

First thing i noticed was you mentioned that you were looking to downsize.  Is it really worth down sizing and and paying on that negative equity in a lump sum?

If you feel you really need to get rid of the existing car... Snap nice pictures of your clean car and post it on Craigslist.  Best case scenario you can sell it for payoff.  Worst case scenario you sell for more than what the dealer is offering you.  Dealer trade in value will always be less because they need to recon, maintain, detail, and turn a profit.  Then use the remaining cash to pay down the CC.

[jetsfan2013]

Thanks for the feedback everyone. A few things to note here:

1. My new car loan indicates I have to trade in/sell the existing car prior to the purchase of the new one (i.e cant sell it private first)

2. I went to 2 dealerships today just to get quotes on what they would offer to buy. Best offer would leave me 3,000 neg equity

If I rolled that 3k into a new loan for 36 mo, my min payment goes up 56 dollars a mo (getting a better rate on the new loan at the 36 mo pricing and improved credit)

[StartingOver10]

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@jetsfan2013 wrote:

Thanks for the feedback everyone. A few things to note here:

1. My new car loan indicates I have to trade in/sell the existing car prior to the purchase of the new one (i.e cant sell it private first)

2. I went to 2 dealerships today just to get quotes on what they would offer to buy. Best offer would leave me 3,000 neg equity

If I rolled that 3k into a new loan for 36 mo, my min payment goes up 56 dollars a mo (getting a better rate on the new loan at the 36 mo pricing and improved credit)

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Looks like a miscommunication here^^^.  What #1 means is you have to get rid of the current auto loan before you purchase the new one.

Your best bet is to sell it privately, you will get more money and have less negative equity, if any at all.  If you are worried that you won't have a vehicle to drive between the time you sell it privately and the time you purchase another vehicle, rent a car if you don't have another one in the family.

The best thing about getting rid of the current one first is you will get a better deal on the purchase of the new vehicle because the dealership won't be able to conflate the trade-in figures and the purchase figures for the new one into a confusing deal. You can then just negotiate the purchase price of the new vehicle - not to mention you won't have to carry that neg equity in the next vehicle financing.

[jetsfan2013]

Thanks for the advice. I reached out to my credit union, and my approval is in place for 60 days. That gives me about 30-45 to attempt to sell my car privately. 

[StartingOver10]

One more tip:  if you have a CarMax in your area, you can take the vehicle there to get a price. They buy vehicles with no obligation to get one of theirs. Their quote is good for 7 days. The good thing about getting a written quote from them is you know the low end of the market pricing .IME they offer more than most dealerships do for a trade, but less than private party. Sometimes it is just easier to go this route (through CarMax) than private party. You might be surprised. I sold two vehicles to them and got more than i had estimated

[Revelate]

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@StartingOver10 wrote:

One more tip:  if you have a CarMax in your area, you can take the vehicle there to get a price. They buy vehicles with no obligation to get one of theirs. Their quote is good for 7 days. The good thing about getting a written quote from them is you know the low end of the market pricing .IME they offer more than most dealerships do for a trade, but less than private party. Sometimes it is just easier to go this route (through CarMax) than private party. You might be surprised. I sold two vehicles to them and got more than i had estimated

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+1 on the CarMax recommendation; there are also some CarMax competitors that have cropped up in the past year or two and they're offering incredibly sweetheart deals if your car is "marketable."

@OP: Didn't see this but what's the APR on your current loan anyway vs. the APR on those credit cards?  59 months left out of a 72 or 84 I would assume?

Generally speaking it makes sense to airstrike CC debt over any secured debt instrument, but if the car isn't working for you anymore, it's not working for you and if you have to change with increased size of family, well yeah, welcome to being an adult I guess .  If you have some time, might not be terribly bad idea to at least look at refinancing the vehicle.

End of the day look at your debt and cashflow post transactions, as that's highly variable as a result of balance size and APRs in this case of the various tradelines, and do yourself a favor and do evaluate the "need" of the vehicle switch, not saying it's wrong and appears written planned on the page from my perspective, but might make sense to delay that somewhat financially.  You have options in this case.

[jetsfan2013]

Thanks for the advice. I took my car to CarMax tonight, and they gave me an estimate of 19k. They also shared that their offer was agressive and that they generally are within 500.00 of any offer by another dealer. 

the APR on my curr loan is 5.89% with now 58 pyts left on an original 72 mo term. I was approved with my CU for 3.85% if I buy something new now , and that rate drops to 3.45% if the term is 36 mo or less. Current CC APR's are 19.99, and 22.99