HELP!Approved with NFCU; Tad Upside Down with Car

[Anonymous]

So I was approved with NFCU for $22,000 for an auto loan. My current car is worth between $3,200-4325 (Fair and Good) and my payoff today is $4,597.  I expect to only pay about $19,800-ish for the new vehicle which includes TTL, etc. 

My question is, since I am approved for $22,000, will the dealership include the trade deficiency into the total price to purchase the new vehicle and then I request that total amount from NFCU or do I need to pay that separately to the dealership or the finance company?

I would try and sell the car but I travel too much for work and just need to get this car off my hands.

[Anonymous]

The negative equity (the difference between what the new dealer gives you and what you actually owe) will be rolled into the grand total amount on the contract with the dealer.

This is the amount they (you) will give NFCU - it will include the sales price of the new car, taxes, title/license fees, all kinds of other documentary fees and related stuff, GAP if you buy it from the dealer (you should NOT), extended service packages, and the negative equity amount.  NFCU will cut a check for that amount and overnight it to you, and you'll give that check to the dealer, then begin paying NFCU back with whatever interest they tack on.

This is routine, and it won't surprise anyone involved.

What you need to be sure of is that you get a written 10-day payoff from your original lender, so you know precisely what amount the new dealer is paying off on your behalf for your traded-in car.  If you know what your payoff is in advance, since you're so close to it anyway, you can perhaps haggle your way out of any negaitve equity by getting the new dealer to up the amount they give you for your trade - especially if the car is very clean, has no cosmetic problems, doesn't have excessive mileage, and has relatively new tires and battery on it.  You might be surprised how they can put a bit more into your trade allowance if they know you are serious about defeating the negative equity - particularly since in  your case that amount is in the range of a few hundred dollars, maybe a grand.

[Anonymous]

Thank you so much! Answered my question perfectly! 

My trade-in is fair on a good day, lol.  2009 Honda Accord Sedan with 154,000 miles. No new battery. Cosmetic problems-- husband said a light pole ran out in front of him so the pasenger back bumper needs repaired. Needs a new tire. Battery terminal needs to be replaced. Battery is about 2 years old. Cracked windshield that barely passes state inspection, lol.

Thanks again!

[StartingOver10]

Check out CarMax. They will give you a quote to buy your car and you aren't obligated to buy from the either.  You have 7 days to accept the quote. In the meantime, you can shop it with others. There are places that advertise "$1000 over your CarMax quote to buy your car".  You can also use it to boost the trade in value - if you decide to go that way. Personally, I have sold a couple of vehicles to CarMax and purchased elsewhere. I prefer to do that because when you are negotiating on a purchase it is best to do the negotiations without a trade IME.  It's cleaner from a negotiating point of view. You are slightly upside down so you may have to bring the difference if their offer doesn't cover your loan, but it is still better for you to separate the transaction away from the purchase. 

[Appleman]

Depending on the value of the trade it can be worth it to trade in on the new vehicle because I only pay tax on the difference (9.5% tax here).

If my trade is valued at $20,000 I save $1,900 in taxes by trading it into the dealer. I agree completely about using CarMax to get a current market value. Dealers have no problem meeting that number.

I also concede that if you are not prepared the dealer can play more games when there is a trade involved (do your homework).

[fltireguy]

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@Anonymous wrote:

Thank you so much! Answered my question perfectly! 

My trade-in is fair on a good day, lol.  2009 Honda Accord Sedan with 154,000 miles. No new battery. Cosmetic problems-- husband said a light pole ran out in front of him so the pasenger back bumper needs repaired. Needs a new tire. Battery terminal needs to be replaced. Battery is about 2 years old. Cracked windshield that barely passes state inspection, lol.

Thanks again!

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The previous poster made a good point, dont buy GAP from the dealer. NFCU did give me a pretty fair deal on GAP when I did my refi - I forget how much it was, but I believe it was about 70% LESS than the dealer charged

[Dalmus]

 You can also purchase factory extended warranties from other sources besides the dealer you purchase the car from.

 For example, with Ford, with a little shopping around you can get a top-of-the-line Ford warranty for 25-50% less than the selling dealer will sell you a 3rd party warranty for.  And you can spread the payments out over 12 months interest-free.  Much better than paying interest on it for 3-6 years on your car loan.