topic Re: good bit of negative equity, looking for advice. in Auto Loans

good bit of negative equity, looking for advice.

Anonymous — Sat, 14 Nov 2015 06:58:37 GMT

hi all, so heres my situation,

recently ive been looking at trading my car in for the car i really want. heres the problem, my first car was bought at CArmax, bless them for getting me into a car at the time, however, my interest rate was 23%. needless to say, two additional auto loans later im pretty upside down.

my principal amount owed on my loan as of today is 23000.

my car im trading in is worth 13,000 on kbb.

the car im looking to purchase is 13-14000, dependant on availability of course.

So, I'm about 10k under water. I guess my question is, is there a possibility a bank would finaince 10k worth of negative equity? because if im correct, the trade in would offset the price of the car and all id have left to finance is the equity. just not sure if thinking the bank will finance my debt is ridiculous or not.

My credit score is mid 700s, if thats any help.

thanks in advance for any responces!

Re: good bit of negative equity, looking for advice.

StartingOver10 — Sat, 14 Nov 2015 12:35:36 GMT

@Anonymous wrote:
hi all, so heres my situation,
recently ive been looking at trading my car in for the car i really want. heres the problem, my first car was bought at CArmax, bless them for getting me into a car at the time, however, my interest rate was 23%. needless to say, two additional auto loans later im pretty upside down.

my principal amount owed on my loan as of today is 23000.
my car im trading in is worth 13,000 on kbb.
the car im looking to purchase is 13-14000, dependant on availability of course.

So, I'm about 10k under water. I guess my question is, is there a possibility a bank would finaince 10k worth of negative equity? because if im correct, the trade in would offset the price of the car and all id have left to finance is the equity. just not sure if thinking the bank will finance my debt is ridiculous or not.
My credit score is mid 700s, if thats any help.

thanks in advance for any responces!

Not going to happen. The trade value is the wholesale value of kbb (maybe), not even close to market value. There needs to be enough value in the new purchase to bury the negative equity. Not really possible when you are scaling down.

From your post it sounds like you have already traded a couple of times and compounded your negative equity. Trading is the very best way to get yourself deep into debt.

Why? Because the dealership hits you on two sides, offers you less for the trade and increases the amount of the purchase. Sometimes they get you with a high interest rate too. At some point you have to pay the negative equity. You can do that in a couple of different ways:

1) Don't trade. Continue to pay your vehicle until you are out of negative equity territory.

2) Sell it yourself so you get somewhere close to market value (rather than taking the hit on a trade) and bring the balance to closing in cash.

3) Trade it, but bring enough cash to the deal.

Cash and/or time are the only ways to get out of huge negative equity.

Re: good bit of negative equity, looking for advice.

Creditaddict — Sat, 14 Nov 2015 17:08:34 GMT

I would start by cleaning the car up and taking it back over to Carmax and getting a buy offer and put real numbers to paper on what they will give you vs. what you owe.

Carmax can probably get you a new loan with about 130% value of the car you are buying but doubt more than that.

Do you have money you can bring to the table on this?

With scores in the 700, I would look at a credit union for a personal loan or a new Capital One Venture One Card and Balance Transfer to yourself and use that to pay the negative on the car and sell it to carmax.

Re: good bit of negative equity, looking for advice.

dabrian — Tue, 17 Nov 2015 06:56:29 GMT

You won't be able to make this happen without bringing cash to the table. Trading again is just going to put you deeper into negative equity, how about paying down your current car a couple of thousand and trying to refi? With were your scores are at this may be possible.

Re: good bit of negative equity, looking for advice.

fury1995 — Tue, 17 Nov 2015 12:44:29 GMT

Actually there are some deals out there on new cars that could cover the entire amount of the negative equity.

Between manufacture cash back and dealer discounts, you could see $10K in total savings dependant on make and model.

The issue will be although the negative equity will be gone on paper, the reality is that you are still paying for it.

Re: good bit of negative equity, looking for advice.

StartingOver10 — Tue, 17 Nov 2015 14:25:58 GMT

@fury1995 wrote:
Actually there are some deals out there on new cars that could cover the entire amount of the negative equity.

Between manufacture cash back and dealer discounts, you could see $10K in total savings dependant on make and model.

The issue will be although the negative equity will be gone on paper, the reality is that you are still paying for it.

This may be true, but he said he was looking to buy a $13k to $14k vehicle in his original post and there aren't $10k cash back and discounts at that price point. He would have to pay substantially more for a vehicle to get that level of discount/cash back.

Re: good bit of negative equity, looking for advice.

fury1995 — Tue, 17 Nov 2015 15:46:07 GMT

The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.

Re: good bit of negative equity, looking for advice.

StartingOver10 — Tue, 17 Nov 2015 23:56:44 GMT

@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.

Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.

Re: good bit of negative equity, looking for advice.

fury1995 — Wed, 18 Nov 2015 01:37:34 GMT

@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.

Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP

$15,595 Price

$13,000 Trade

$23,000 Payoff

$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).

Re: good bit of negative equity, looking for advice.

Creditaddict — Wed, 18 Nov 2015 01:38:50 GMT

Nissan is offering 0% for72 months on Altima and many other cars... 680 should get you 0% if not lower!!

Re: good bit of negative equity, looking for advice.

Anonymous — Wed, 18 Nov 2015 02:34:32 GMT

thanks for all the great responses guys,

I actually have a new cruze, not looking for another new car, what i want to buy is a used wrx sti. sounds like a questionable trade in, brand new car, for a used sports car. what can i say. it doesnt look like they would finance it straight out, so i may just try and make additional payments on my current loan to knock down the principal amount and try to get the car at a later date with a small down payment. sounds like the most responsible way to go.. as much i want an Sti.

thanks again guys!

Re: good bit of negative equity, looking for advice.

dabrian — Wed, 18 Nov 2015 06:48:33 GMT

With that price of 15900 will they also do the 72 financing? Lowest list price around I can find is 17900. I'm not crazy about the altima but that would be a cheap very reliable vehicle to have around if that price is actually attainable.

Re: good bit of negative equity, looking for advice.

OCIL — Wed, 18 Nov 2015 09:09:32 GMT

@fury1995 wrote:
@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.
Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP
$15,595 Price
$13,000 Trade
$23,000 Payoff
$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).

The math is great, however taking in to account you still have to find a finance company for a loan like that. The reason they give such huge "incentives" is due to the fact that market value on the car has now fallen, that's why towards the end of the model year you see huge discounts like 8-10k. When banks look at the value of a car they pull up "black book" or "NADA" and will finance up to 130% for prime credit and falls below that once an applicant has blemishes on their reports.

Re: good bit of negative equity, looking for advice.

Creditaddict — Wed, 18 Nov 2015 15:33:09 GMT

@OCIL wrote:
@fury1995 wrote:
@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.
Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP
$15,595 Price
$13,000 Trade
$23,000 Payoff
$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).
The math is great, however taking in to account you still have to find a finance company for a loan like that. The reason they give such huge "incentives" is due to the fact that market value on the car has now fallen, that's why towards the end of the model year you see huge discounts like 8-10k. When banks look at the value of a car they pull up "black book" or "NADA" and will finance up to 130% for prime credit and falls below that once an applicant has blemishes on their reports.

I feel like banks loan on Blue Book.

You trade in on Black Book.

Re: good bit of negative equity, looking for advice.

fury1995 — Wed, 18 Nov 2015 19:03:46 GMT

@OCIL wrote:
@fury1995 wrote:
@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.
Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP
$15,595 Price
$13,000 Trade
$23,000 Payoff
$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).
The math is great, however taking in to account you still have to find a finance company for a loan like that. The reason they give such huge "incentives" is due to the fact that market value on the car has now fallen, that's why towards the end of the model year you see huge discounts like 8-10k. When banks look at the value of a car they pull up "black book" or "NADA" and will finance up to 130% for prime credit and falls below that once an applicant has blemishes on their reports.

That is not the scenario but if the OP ha s sub par credit and I were using a pre-owned vehicle in the example.. you would be correct...

The OP has said he is in the mid 700's

Captive Finance Lenders use their Maufacture's MSRP / Invoice for advance, not NADA or book values unti AFTER January 1st for previous model year NEW cars.

Most other lenders consider the same when financing NEW cars.

There are plenty of sources available for this.

Re: good bit of negative equity, looking for advice.

MauiMan85297 — Thu, 19 Nov 2015 17:24:31 GMT

@OCIL wrote:
@fury1995 wrote:
@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.
Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP
$15,595 Price
$13,000 Trade
$23,000 Payoff
$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).
The math is great, however taking in to account you still have to find a finance company for a loan like that. The reason they give such huge "incentives" is due to the fact that market value on the car has now fallen, that's why towards the end of the model year you see huge discounts like 8-10k. When banks look at the value of a car they pull up "black book" or "NADA" and will finance up to 130% for prime credit and falls below that once an applicant has blemishes on their reports.

First of all the numbers you're showing for a discounted price would include all rebates that he might not qualify for (student, military, prior NMAC, etc) and rebates can't be combined with special APR rates. There isn't a bank or auto lender that will finance more than 130% of book value and when you're 10k in the hole it's too steep to come out of without a lot of money down. No reason to sugarcoat things, Car guy here for 25 years

Re: good bit of negative equity, looking for advice.

Creditaddict — Thu, 19 Nov 2015 17:29:27 GMT

OP What about a lease and then in 24 months you can walk away from the negative equity (sort of!)

I just leased a 2016 GMC Terrain for $159 + tax month with just $1059 down and I'm getting a $700 Costco Cash Card in the mail.

I did get a $1000 lease conquest rebate for having a competitor lease (my Nissan rogue which I'm keeping)

The lease is just 24 months and is covered bumper to bumper for the entire time.

Without the lease conquest the total rebates would have been just shy of $4000. I wouldn't be surprised with $1-$3k down GM financial not sticking the remainder in the lease. $27(ish) dollars more a month per $1k so you could still be under $350/month.

Then in 24 months just turn it in and walk away and start fresh with no negative equity in any car!

Re: good bit of negative equity, looking for advice.

fury1995 — Thu, 19 Nov 2015 21:05:09 GMT

@gsully00 wrote:
@OCIL wrote:
@fury1995 wrote:
@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.
Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP
$15,595 Price
$13,000 Trade
$23,000 Payoff
$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).
The math is great, however taking in to account you still have to find a finance company for a loan like that. The reason they give such huge "incentives" is due to the fact that market value on the car has now fallen, that's why towards the end of the model year you see huge discounts like 8-10k. When banks look at the value of a car they pull up "black book" or "NADA" and will finance up to 130% for prime credit and falls below that once an applicant has blemishes on their reports.
First of all the numbers you're showing for a discounted price would include all rebates that he might not qualify for (student, military, prior NMAC, etc) and rebates can't be combined with special APR rates. There isn't a bank or auto lender that will finance more than 130% of book value and when you're 10k in the hole it's too steep to come out of without a lot of money down. No reason to sugarcoat things, Car guy here for 25 years

1. It was to demonstrate an example. Not to sell an Altima.

2. You're wrong. You can get 145% of Invoice of NADA Retail with certain lenders.

.. not just a car guy here.... F&I Director / Used Car Manager / Multi Brand New Car Manager here and I know how to work an app. 20 plus years in high population, high volume, highline, cross brands. Don't be so shortsighted.

Re: good bit of negative equity, looking for advice.

MauiMan85297 — Fri, 20 Nov 2015 13:02:09 GMT

@fury1995 wrote:
@gsully00 wrote:
@OCIL wrote:
@fury1995 wrote:
@StartingOver10 wrote:
@fury1995 wrote:
The local Nisaan dealership is offering over $8,300 off MSRP in combined discounts on new Altimas and are priced in the mid teens ($15K to $16K).

Not quite in the $13K to $14K range and not $10K off but it's very close if someone was looking for an avenue to investigate.

Again, just an example not a reccomendation.
Wow, that's amazing. So, if you don't mind, can you show the OP the numbers on how that would work so he can see what he can do to manage his current payment.
Sure..

Excluding taxes / fees (don't know where you live)

$24,150 MSRP
$15,595 Price
$13,000 Trade
$23,000 Payoff
$25,595 Amt Financed

@$385.91 for 72 moths at @ 2.74% (DCU Published Rate) OAC

$2,190.52 Finance Charges

$27,785.52 Total of Payments/Def Payment Price

Assumes no taxes / fees rolled into the payments (paid up front).
The math is great, however taking in to account you still have to find a finance company for a loan like that. The reason they give such huge "incentives" is due to the fact that market value on the car has now fallen, that's why towards the end of the model year you see huge discounts like 8-10k. When banks look at the value of a car they pull up "black book" or "NADA" and will finance up to 130% for prime credit and falls below that once an applicant has blemishes on their reports.
First of all the numbers you're showing for a discounted price would include all rebates that he might not qualify for (student, military, prior NMAC, etc) and rebates can't be combined with special APR rates. There isn't a bank or auto lender that will finance more than 130% of book value and when you're 10k in the hole it's too steep to come out of without a lot of money down. No reason to sugarcoat things, Car guy here for 25 years
1. It was to demonstrate an example. Not to sell an Altima.

2. You're wrong. You can get 145% of Invoice of NADA Retail with certain lenders.

.. not just a car guy here.... F&I Director / Used Car Manager / Multi Brand New Car Manager here and I know how to work an app. 20 plus years in high population, high volume, highline, cross brands. Don't be so shortsighted.

Not all lenders use NADA retail, but it sounds like you can get him done. No longer working weekends or 12 hour shifts (ex car guy here)

Re: good bit of negative equity, looking for advice.

Anonymous — Thu, 26 Nov 2015 08:17:48 GMT

Hey guys I'm in a current situation adn also bought from carmax wtih a 24% rate and I owe $16,000 and upside down about $8,000. Thanks