Help me with my Dream Car!

[ashjt2011]

Here is my situation – I need some advice.

I bought my car last year, it is a 2015 Sonata. I had to build 5k in negative equity into the loan because my old car was about to run out of a warranty and I had driven it 70k in 2.5 years.

Fast forward to now. I got a promotion at work, I am doing good. I have built up my savings, bought my first house which reduced my housing expenses by about 750-800/month. I am in a good place and want to reward myself with one of my dream cars. I found an Audi A3 Presige 2.0t TDI and I am in love!

The dealership is telling me I have about 11k in negative equity in my car, and they were doubtful they would be able to find a lender to finance the car with all that negative equity. I don’t think anybody came back with an approval, but it was Saturday at 4:45, so banks weren’t really open to look at the loan. I am waiting to hear back this morning.

My credit is good. I have a really good mix of credit between credit cards, a car loan for the last year and a personal loan. I also have some student loans. My Auto Fico8 scores range from 660-700 between the bureaus. I have about 3-4 inquiries from random moving things and a couple new credit cards. My utilization is about 40% on my CC. I make 55k a year, and my DTI is between 32-45% depending on how they factor student loans in (mine are in deferment for quite awhile). I have a ch. 7 that is 2.5 years old but that didn't effect me last year when buying my sonata, neither did it effect me when buying my house.

Any suggestions on how to get my dream car?

[mynameainttracy]

I know this isn't what you want to hear, but you need to wait, pay down your credit cards and get off this negative equity roller coaster you have gotten on. I've been there and it is not good.

[6speed8]

Agreed. I'd hold off. A friend rolled negative equity three times in 18 months - probably got them all through as having been a car salesman - but is now paying $700+ a month on a leased C230 with nothing but a sunroof. Sit on your hands for a bit. I've been without my own car for 4 years now. Sharing my now hubby's car. I did a Cap One pre-qual last week. Not much because of my income being strictly from Disability but I could go out today and get something around $20,000 with what I have as a down payment now. I'm choosing to sit on my hands for the rest of the year until my down payment is bigger and my credit card balances are lower so I can at least get a car that's on my list of wants, rather than just running out and getting a car for the sake of having a car. Be patient Grasshopper

[Chris679]

Reward yourself by making the smart financial decision to get out of bad debt. Pay off the car loan and pay off the credit cards. Also stop looking at cars because you will just find an excuse to buy another one. Once everything is paid off reward yourself with the Audi.

[settleordelete]

You don't want your dream to become a nightmare.

I would keep the Hyundai a while longer, increase my income, pay off the cards and save up a lot of cash.
That way I could enjoy that A3 better.

[Cellice]

Your payment is going to be very high with that much negative equity. If you can afford it I would recommend refinancing your Sonato at a lower interest rate for a shorter period of time so you can make some of the negative equity disapear before moving onto another vehicle.

The A3 will be refreshed next year. You are going to take a huge equity hit because of that. That is ontop of the higher equity hit from buying a luxury car.

[Anonymous]

Can you list all your debts in dollars rather than percentages? Also what is your take home savings (monthly income minus taxes, mortgage, expenses, and loans)? If I'm reading correctly, that car costs more than 40k and you make less than that after taxes, that seems like a big stretch.

[Anonymous]

The question is do you want to enjoy your dream car or do you want to drve it around knowing your in deep debt because it.  No way would I ever roll 11k of negative equity into a car loan, most lenders wont go for it anyway.  I would hang on to the car you have and make extra principle payments until you are even or near even with the payoff.  I wouldnt trade it in because you can probably sell it for a couple of grand more on the private market and you have the kind of car that sells easily.  

[6speed8]

Stick with the Sonata. Owned a 2008 that we traded with 115,000 miles in 2012 for a Kia Forte - Kia/Hyundai are the same company.Never an issue with it. Reliable as sunrise and the same with the Forte now at 75,000 miles. A new Sonata is actually one of the few cars on my new car list. In my search of deaker inventory for left over 2015's, I actually ran across our 2008 at a dealer about 100 miles away. Now has 238,000 miles on it and other than looking a little worn, it's in good shape. Keep the Sonata until things are stable for at least a year. Last thing you want is rolling negative equity into your "dream car" and the job falls apart.

[ashjt2011]

Thanks everyone for the responses! 

I did decide against doing the deal. As one poster pointed out, they are redesigning the A3 next year which would take a hit to the value. Not to mention - I would be wanting the redesign and would become discontent with the car. Just the way I am.

To answer some questions, my before taxes pay is about 55-57k depending on bonuses. I do have a second income from my spouse of about 30-35k, which pays for the bills, mortgage, etc. etc. I am not doing bad as far as finances at all and have been able to save a considerable amount of money in the recent months - especially with my new home.

I don't include my spouse in the debt to income ratios or anything really because of their credit at the moment (which we are working on). But if I were to include their debts and figure out a DTI, I would be closer to the 20% mark.  

I can easily pay off my credit cards with my savings, but dont feel the need because they are at 0% right now - I eventually will pay them off, especially before the 0% runs out.

To get the car to work with the numbers, the best approval they got back was almost 8k down and a horrendous 9% interest rate. I have about a 4% right now, so that also helped me decide against going for it.

My plan is to pay about 100-150 extra month on the Sonata and then sell it on the private market in a year or two. I should be closer to breaking even at that point. At least hopefully. Only time will tell. I don't care for my Sonata as much as I did when I bought it after some of the stuff I have went through with it and the dealership I bought it from, but its still a decent car and will last me awhile. 

Thanks again everyone for helping me make a wise decision!