Advice on negative equity

[Anonymous]

Hello everyone,

I am new to this forum. I would like to start off by saying on March 2017, I got approved for a car loan of $13,416 @ 24% for 72 months with Santander and a $3,500 down payment. Nobody would accept me at that time due to not having no type of credit at the time.

My credit score now is in the 660’s and I was considering on trading in my vehicle for a new one due to problems. (I’ve took it to three mechanics and nobody can seem to figure out the problem. It’s a Hyundai Sonata sport) According to KBB my vehicle trade-in is $9,400 therefore leaving me underwater.

So far, my account balance is $12,800. I was considering with income tax paying $2,500 on principle only. I do not plan on refinancing since so far I’ve wasted so much money on mechanics who never seem to find the problem. However, that will be my last option if it’s impossible trading in a car.

Do you think by paying a large amount of principle will I get out of underwater? Any suggestions out there?

[ridgebackpilot]

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@Anonymous wrote:
Hello everyone,

@I am new to this forum. I would like to start off by saying on March 2017, I got approved for a car loan of $13,416 @ 24% for 72 months with Santander and a $3,500 down payment. Nobody would accept me at that time due to not having no type of credit at the time.

My credit score now is in the 660’s and I was considering on trading in my vehicle for a new one due to problems. (I’ve took it to three mechanics and nobody can seem to figure out the problem. It’s a Hyundai Sonata sport) According to KBB my vehicle trade-in is $9,400 therefore leaving me underwater.

So far, my account balance is $12,800. I was considering with income tax paying $2,500 on principle only. I do not plan on refinancing since so far I’ve wasted so much money on mechanics who never seem to find the problem. However, that will be my last option if it’s impossible trading in a car.

Do you think by paying a large amount of principle will I get out of underwater? Any suggestions out there?

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It's not unusual to be $3,400 underwater, especially when trading in a car. Your only options are to (1) keep the car until it's either paid off or you're no longer underwater (which might be never); (2) pay down the loan so that it matches what the car is worth, (3) sell the car privately and get more than you would by trading it in, or (4) roll your negative equity into your next car loan.

I'm facing the same situation right now. I'm "trading up" from a 2012 car to the 2016 CPO version of the same model. My existing loan is underwater by about the same as yours. I'm planning to excercise option (4) above and simply fold that negative equity into my new loan (at a much lower APR).  To sweeten the deal, I'll make a downpayment to cover the loss. The latter is optional but can help you qualify for better terms on your next loan.

[Anonymous]

DCU will finance 120% of the value of a new or used car.

It's possible with rebates and discounts you might be able to burry that negative equity and get the whole thing financed.  For example if you got a 30K sticker price car for $25K it might all work out.

Absolutely consider GAP insurance if starting upside down.  In my opinion it's a must.

[Anonymous]

I tried option (4) and according to the dealership (I went on Mid-November). I will need to put a down payment between the amount of $4,000 to $5,000 because I will be underwater. Also, I can’t roll over the amount due to the “insane” amount (which was actually $4000 upside down at that time). However, with income nearby I wasn’t too sure on either paying down the loan to equal the car value or just roll it over and give a good amount of down payment. (Not sure if both are the same results).

[Anonymous]

Can you educate me more on DCU? How exactly does it work? How can I get started?

[Ardecko]

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@Anonymous wrote:
Can you educate me more on DCU? How exactly does it work? How can I get started?

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Can you explain what you want to know?

They're a credit union. You can open an account with them online. You can apply for a loan online or by calling them(which I did, after having opened an account a few months prior).

[Kree]

Rebuilding your loan it looks like you are paying about 350 a month, is this correct?

If so, you can get a 24000 loan,  (20k car 4k roll over  at 120% limit for many financers) for about the same monthly cost if you get sub 5% interest. Which might be doable with a 660, but not guaranteed.