cancel
Showing results for 
Search instead for 
Did you mean: 

How do you trade in when you're so far upside down?

Auto Loans for ANY Credit Situation. Immediate Response.
Advertiser disclosure
Established Contributor

How do you trade in when you're so far upside down?

I was approved for a new vehichle from my credit union.  Here are the stipulations

 

1. Must find a new vehicle 90% of msrp value or a  used vehicle 10% under nada retail value.

 

2. Must trade in current vehichle.

 

This sounds fine and dandy until my current vehicle is worth 15k less than the trade in value. 

 

How on earth could I work this out? There is no way anyone is selling a car 27% under msrp for me to obtain this car. Is there?

 

For those that have questions about the trade in. When I got the loan my credit was trash and I was stuck with Exeter at a 19% interest rate. In that time the interest was being paid but the principal wasnt moving and the value was decreasing. The focus of this thread is finding a car 25 -27% under msrp if possible. 


Equifax - 628, Experian -627, Transunion- 654 In the garden until 01/01/2019
Message 1 of 10
9 REPLIES 9
Senior Contributor

Re: How do you trade in when you're so far upside down?

Just because you want a new car doesn’t mean you can afford one.

 

pay down that loan first then come back when you can get a new LTV of under 80%.

Message 2 of 10
Highlighted
New Member

Re: How do you trade in when you're so far upside down?

If you must find a car, you might check out Acrua. They're nearly giving away 2019's including the TLX / ILX. I got a quote for 25% off MSRP for a lease and I haven't yet gone back to beat them up.

Message 3 of 10
Established Contributor

Re: How do you trade in when you're so far upside down?


@CapitalPrime wrote:

If you must find a car, you might check out Acrua. They're nearly giving away 2019's including the TLX / ILX. I got a quote for 25% off MSRP for a lease and I haven't yet gone back to beat them up.


Ok Ill check them out.

 

 


Equifax - 628, Experian -627, Transunion- 654 In the garden until 01/01/2019
Message 4 of 10
Established Contributor

Re: How do you trade in when you're so far upside down?


@ABCD2199 wrote:

Just because you want a new car doesn’t mean you can afford one.

 

pay down that loan first then come back when you can get a new LTV of under 80%.


The car is a pile of junk. In and out of the shop 6 times this year and its only june. Ive spent more money getting this thing fixed since its out of warranty when I couldve just used that money as a down payment on a new car. 

 

i refuse to throw away any more money into this mess


Equifax - 628, Experian -627, Transunion- 654 In the garden until 01/01/2019
Message 5 of 10
Valued Contributor

Re: How do you trade in when you're so far upside down?

These are tough situations, I have been in this position before.  The most important thing to note is you will end up paying for that negative equity at some point, the longer you wait the more it snowballs.  I learned this the hard way.  Yes you can find a car being sold with a giant discount but what they are selling it to you for is the real value so that 20-25% discount really just becomes negative equity so in addition to the normal depreciation your paying MSRP for a car that everyone else can buy for 25% less.  My point is this will be a tough deal to live with so don't do it unless you can live with that car for 5-6 years because you will have significant negative equity until the end of that loan.

 

To make the deal work you will have to seek out slow selling cars, left over 2018 models and cars with pretty high MSRPs so that negative equity can be hidden in the deal. 

 

Having lived through this I would just keep the car you have, make extra payments and fix it as it needs it, you will be far better off financially doing that.

 

Let us know how it works out.

Message 6 of 10
Valued Contributor

Re: How do you trade in when you're so far upside down?

Also Edmunds website has a forum with tons of information on pricing, discounts etc.  That is where I would go to find a vehicle that would fit your criteria to pull this off.

Message 7 of 10
Regular Contributor

Re: How do you trade in when you're so far upside down?

Even though I bought a used car known for reliability for this very reason, I, at least, with my low credit score, got a decent APR. considering all things.  And even then, when looking at how  much interest I'm paying, I've rounded my payment up to the next 50 ($13 extra a month), and I've added a recurring principal payment of $50 every month, and I'm going to pay an extra payment thrown in to prinicipal every year at a minimum.  Also, I'm now making my payment soon after the statement cuts, instead of close to due date, and it has really knocked what interest I am paying down by almost half, it appears, when looking at how they are applying my monthly payment to interest and principal by doing that compared to the previous payment of paying close to the due date.  Is that something you could do for a year on your loan, if you do have to keep it another year, worst-case scenario.   I don't know the terms of a Santander loan.

 

 Looking at your extremely high interest rate, without extra principal payments from the beginning, you were screwed.   On top of that, having a car now out of warranty, and breaking down is really bad luck.  You have my sympathies.  Is there any way you could keep it another year?  During that time, you could pay heavily towards the principal with extra payments, and by then you not only will have even higher credit for an even better interest rate, but, more  importantly, not be SO negative in the equity, and, hopefully, have saved for an even higher down payment to offer, also helping you not be so upside down in your new car loan. 

 

What make/model vehicle did you buy that is having so many repairs so early on, if you don't mind my  asking?  And are the repairs major repairs or just smaller repairs that are adding up?  

 

But if you really want to take advantage of the CU loan offer now, I haven't a clue.  There are a few people on here who worked in the dealership industry for years and could maybe chime in on here regarding your questions on meeting the CU's loan criteria as far as your options.

 

Good luck!

 

 

Open Credit Cards:
Green Dot Primor Secured (5/18) - $450 CL
Capital One Platinum (8/18) PC'd to Quicksilver (9/19) - $600 CL
Capital One QuicksilverOne (3/19) - $1500 CL
Merrick Bank DYL VISA (6/19) - $700 CL - (Doubles to $1400 CL 12/19)
Discover it Cash Back (9/19) - $1000 CL

Experian FICO Score - 8/2018: 528
Experian FICO Score - 9/2019: 647
Message 8 of 10
Senior Contributor

Re: How do you trade in when you're so far upside down?

This sounds fine and dandy until my current vehicle is worth 15k less than the trade in value.

- ???? I think maybe what you're saying is that the trade-in value is $15k less than your loan balance/what you owe on the car? If so that's going to be hard to overcome. It's highly unlikely you'll find someone who will sell you a car for 25 -27% under msrp, if you did there's probably something wrong with the car, a model that's selling badly, and models that sell badly do so for reason.

 

Must find a new vehicle 90% of msrp value or a used vehicle 10% under nada retail value

- I would laugh at a loan officer who told me that, and tell them "fine, you go car shopping for me". Large credit unions like DCU or Penfed, and even my small local CU will go 110% of MSRP or NADA value for used. But, even a 110% loan won't solve you underwater problem with your current car.

 

I know you want to get rid of your current car and I don't blame you, a car that needs constnt repair is very inconvenient plus a waste of money. But one solution would be to refi your current loan, with your current scores you should be able to get 5-6%, and pay on it for a year to get the loan balance down. YOu might get lucky, after 6 repairs already this year maybe it will run OK for awhile.

 

 


Fico 08: 734/716/734 TU/EX/EQ
Message 9 of 10
Frequent Contributor

Re: How do you trade in when you're so far upside down?

What it looks like to me is your credit union wanted to be nice and give you an approval knowing more then likely you would not be able to accept the offer. Based on them wanting to finance 90% it would appear there is something in your credit report that concerns them to require you to put 10% down. I have financed a vehicle through multiple credit unions, and all have always offered to finance up to 110% of the value of the vehicle. They want you to trade in your current vehicle because otherwise your DTI would be too high. So it would appear you are way upside down with the car. If you are wanting to trade really bad I would suggest paying the $15k and look at trading at the dealership to see what kind of rates they can offer.

Message 10 of 10
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.