Little Guidance?

[Anonymous]

Well.. 
Here's some news.. WE'RE EXPECTING!!
an Unplanned little one, but not unwelcomed <3 

Unfortunately-- I currently am driving a 2013 Dodge Charge SXT AWD with (2) 6 year old Boys, Myself, My Boyfriend and our two BIG German Shepherds. 
IT's a very tight fit but we've been making it work for Camping Trips/Road trips, etc. 

Well now with baby #3 on the way - that is just not going to work.
Boyfriend currently drives a Silverado but his credit is not in the greatest position to finance. 

Currently owe $23,400 on my car at a very ugly 15.45% (Credit was 585 when I Financed 12 months ago). KBB Is placing it between $15,000-$18,000 for a trade in.  

Do I refinance the car? And then everyone drives around in separate vehicles? 
Do I Trade my car in and hope the dealership and Pray they roll over (almost $5,000?? into the new loan)
Which way do I go here? 

Any suggestions are welcome. 

Current Credit Auto Credit scores (As of 8/2016)
EQUIFAX:  Score 8: 624 / Score 5: 615
TRANSUNION: Score 8: 642 / Score 5: 626
EXPERIAN: Score 8: 611 / Score 5: 591

[Appleman]

Wow, sounds like you have a bit on your plate!

Congrats on the new addition.

I would recommend setting up a budget if you have not done this already. That way you know how much you might be able to afford.

A few random recommendations:

If you live near a CarMax, go and get a FREE buy offer for your Charger. This is what a dealer is likely to give you as trade in on the vehicle.

Go to the CapitalOne Auto Navigator site and see if you are pre-qualified for an auto loan. This needs to be the SP (soft Pull) Cap1 site that lets you know if they will finance you.

You may want to take a look at a 2015-2016 Chrysler Minivan as you should be able to get a good deal on one that has been gently used. 

Above all be prepared before walking into a dealer. They will do what they can to get you into a new vehicle but remember they are going to try to maximize their profit. 

Finally, trying to bury $5,000 to $8,000 of negative equity will be difficult and one way or another you are going to pay for the negative equity.

Good luck and let us know if you have other questions.

[Anonymous]

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@Appleman wrote:

Wow, sounds like you have a bit on your plate!

Congrats on the new addition.

I would recommend setting up a budget if you have not done this already. That way you know how much you might be able to afford.

A few random recommendations:

If you live near a CarMax, go and get a FREE buy offer for your Charger. This is what a dealer is likely to give you as trade in on the vehicle.

Go to the CapitalOne Auto Navigator site and see if you are pre-qualified for an auto loan. This needs to be the SP (soft Pull) Cap1 site that lets you know if they will finance you.

You may want to take a look at a 2015-2016 Chrysler Minivan as you should be able to get a good deal on one that has been gently used. 

Above all be prepared before walking into a dealer. They will do what they can to get you into a new vehicle but remember they are going to try to maximize their profit. 

Finally, trying to bury $5,000 to $8,000 of negative equity will be difficult and one way or another you are going to pay for the negative equity.

Good luck and let us know if you have other questions.

---

Yes, 100% on going to Carmax.  I used KBB and the other.  I was always too high until I read an article somewhere that, for condition, even if you took excellent care of your vehicle, it will almost always be rated as "GOOD" by the appraiser.  I went to Edmunds to look at their TMV and selected GOOD (even though the 2015 Jeep Cherokee I traded in was in perfect condition), they gave me a TMV of around $21K.  I went to Carmax and they offered me $19K.  Nope, not $21 but faily close.  With Carmax's offer in hand, I went to a local dealer.  Before we discussed a new car, I had them appraise my Jeep.  Guess what?  They came back offering me $17,500.  I'm sure you can imagine my reaction to that.  So, do not expect the dealer to give you the same price as Carmax.  Fortunately, with that offer letter from Carmax, the Ford dealer matched the price.  Hmm ... since we are talking about Carmax, why not look at their vehilcle inventory?

As Appleman notes, the negative equity will be tough.  In the past, because of my poor credit and high APR, I almost always owed more than the trade-in value.  Fortunately though, I paid down enough where the negative equity wasn't too significant to role into the new car loan.  Do you have any money to put down?  How long before the baby arrives?  The reason I ask is to see if you have time to pay down as much as you can on the current vehicle.  Yes, go to Cap1 as Appleman states.  They will give you a worksheet where you can plug in numbers--i.e. how much you intend to put as a downpayment, how much is your trade-in worth, and how much do you owe.  When you plug in the trade-in value, go back to KBB (or Edmunds) and use the GOOD condition (or the level below the one you originally selected).

I probably wouldn't go to Carmax until you are ready to make this happen.  Their offer will be good for 1 week.

Congratulations to you and the family.

[Anonymous]

Wow!! Thank you both very much for the input and the congrats!
I'm only about 6 weeks along, so in theory i have about 7-8 months to go.
We have an emergency fund of $5,000 put away, but I don't see this as an emergent situation, more of that for the sake of convenience.

What about financing a car of lesser value?
Just for the sake of arguement let's say the dealer offers me$17,000 for my car.
I owe $23,00 so that's $6,000 in negative equity.

So if I find an SUV in the $11,000-$12,000 range could I possibly get the negative equity equaled out? Since the dealer would owe me $5-$6k and I owe $6k on the car? Does it work that way or am I looking at the pies in the sky?


Thank you both again for your suggestions!!

[RASULL12]

In order to get this to work (and with little or no money out of pocket) I think you would have to find a new vehicle that has some good rebates and discounts like an outgoing 2016 model. Typically (but not always) this is the only way you can roll in that type of negative equity. It may not be the wisest decision from a financial standpoint but it comes down to what the value of a vehicle capable of accomadating your family is worth in the short and long run. 

to provide an example of my situation I purchased a new 2013 Durango with no money down and a score in the low 500s and it cost me a lot in interest (20%). I had just graduated college and thought spending $40k on a new car was a good idea (and I did love that vehicle everyday that I owned it) after 3 years of payments on time I found myself at the dealership admiring a new loaded 2015 Durango that was leftover as this was in April of this year. I figured I would see what kind of deal if at all was possible. They offered me $18k for my trade and I owed $27xxx. The new vehicle was discounted by about $9500 (original MSRP $50500), they originally worked it out so that I could keep my payment about the same which I fidured why not get a new one as I do drive a lot and already had 80k miles. when I met with the finance guy he started working some numbers and said he could get my interest down to 3.9% (with fico auto scores ranging from 595 to 630) if i bought the extended warranty with it down from the 9%they originally quoted me (and yes I know that I could have cancelled if I wanted to but I did want the warranty anyways.) including warranty and taxes and everything I was able to get my payment lowered by almost $100/mo. 

I think going at the end of the month was in my favor and I would suggest you do the same.  

[sarge12]

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@Appleman wrote:

Wow, sounds like you have a bit on your plate!

Congrats on the new addition.

I would recommend setting up a budget if you have not done this already. That way you know how much you might be able to afford.

A few random recommendations:

If you live near a CarMax, go and get a FREE buy offer for your Charger. This is what a dealer is likely to give you as trade in on the vehicle.

Go to the CapitalOne Auto Navigator site and see if you are pre-qualified for an auto loan. This needs to be the SP (soft Pull) Cap1 site that lets you know if they will finance you.

You may want to take a look at a 2015-2016 Chrysler Minivan as you should be able to get a good deal on one that has been gently used. 

Above all be prepared before walking into a dealer. They will do what they can to get you into a new vehicle but remember they are going to try to maximize their profit. 

Finally, trying to bury $5,000 to $8,000 of negative equity will be difficult and one way or another you are going to pay for the negative equity.

Good luck and let us know if you have other questions.

---

Funny you should mention a 2015-2016 chrysler minivan...my niece just bought a 2015 chrysler town and country touring, fully loaded for less than 20k. It had 30k miles, as it was formerly an enterprise rental vehicle. Normally we would not consider a rental car, but you have to consider what type of people would rent minivans. I suspect vacationing families,and mostly highway miles. The credit union would loan 22.5k on the vehicle, at 1.75% interest so not likely to windup upside down on it. A mini-van may not be as sexy as an SUV, but you can get a better deal on them. Insurance is cheaper on them, as are the taxes. It has built in tv, electric sliding doors, power everything, and seats can stow into floor for more cargo space. It seats 7 comfortably. It has the remainder of 5yr/60k powertrain warranty.

[fltireguy]

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@sarge12 wrote:

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@Appleman wrote:

Wow, sounds like you have a bit on your plate!

Congrats on the new addition.

I would recommend setting up a budget if you have not done this already. That way you know how much you might be able to afford.

A few random recommendations:

If you live near a CarMax, go and get a FREE buy offer for your Charger. This is what a dealer is likely to give you as trade in on the vehicle.

Go to the CapitalOne Auto Navigator site and see if you are pre-qualified for an auto loan. This needs to be the SP (soft Pull) Cap1 site that lets you know if they will finance you.

You may want to take a look at a 2015-2016 Chrysler Minivan as you should be able to get a good deal on one that has been gently used. 

Above all be prepared before walking into a dealer. They will do what they can to get you into a new vehicle but remember they are going to try to maximize their profit. 

Finally, trying to bury $5,000 to $8,000 of negative equity will be difficult and one way or another you are going to pay for the negative equity.

Good luck and let us know if you have other questions.

---

Funny you should mention a 2015-2016 chrysler minivan...my niece just bought a 2015 chrysler town and country touring, fully loaded for less than 20k. It had 30k miles, as it was formerly an enterprise rental vehicle. Normally we would not consider a rental car, but you have to consider what type of people would rent minivans. I suspect vacationing families,and mostly highway miles. The credit union would loan 22.5k on the vehicle, at 1.75% interest so not likely to windup upside down on it. A mini-van may not be as sexy as an SUV, but you can get a better deal on them. Insurance is cheaper on them, as are the taxes. It has built in tv, electric sliding doors, power everything, and seats can stow into floor for more cargo space. It seats 7 comfortably. It has the remainder of 5yr/60k powertrain warranty.

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I would stay away from ANY rental vehicle, especially Enterprise! Knowing what I know, as far as their maintenance programs, and how they do things (For example, they will NOT pay the shop that does the oil changes extra to use the correct oil in Toyota and Nissan products)... They do it THEIR way,  not the way the vehivle Mfg. wants it done, and they will use the cheapest way to do everything!  Plus, more than likely, any rental hasn't exactly been driven in the nicest manner by the renters... 

Also, since they are self insuring, it is extremely possible that you may purchase a vehicle that was in an accident, yet has a clean crfax.

You would be MUCH better off staying away from previous rentals, and finding a Honda Odyssey, for example, that has a MUCH better reliability record than ANY Dodge/Chrysler product.

[Appleman]

I would take the Honda versus Chrysler argument in stride. However related to absorbing some negative equity you will likely have better luck with the Chrysler related to depreciation.

Heading with a lower price point will likley give you less room to absorb the negative equity into the deal. Continue to do your homework and be prepared to walk if the deal is not good for you. 

[jeffm4688]

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@Anonymous wrote:

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@Appleman wrote:

Wow, sounds like you have a bit on your plate!

Congrats on the new addition.

I would recommend setting up a budget if you have not done this already. That way you know how much you might be able to afford.

A few random recommendations:

If you live near a CarMax, go and get a FREE buy offer for your Charger. This is what a dealer is likely to give you as trade in on the vehicle.

Go to the CapitalOne Auto Navigator site and see if you are pre-qualified for an auto loan. This needs to be the SP (soft Pull) Cap1 site that lets you know if they will finance you.

You may want to take a look at a 2015-2016 Chrysler Minivan as you should be able to get a good deal on one that has been gently used. 

Above all be prepared before walking into a dealer. They will do what they can to get you into a new vehicle but remember they are going to try to maximize their profit. 

Finally, trying to bury $5,000 to $8,000 of negative equity will be difficult and one way or another you are going to pay for the negative equity.

Good luck and let us know if you have other questions.

---

Yes, 100% on going to Carmax.  I used KBB and the other.  I was always too high until I read an article somewhere that, for condition, even if you took excellent care of your vehicle, it will almost always be rated as "GOOD" by the appraiser.  I went to Edmunds to look at their TMV and selected GOOD (even though the 2015 Jeep Cherokee I traded in was in perfect condition), they gave me a TMV of around $21K.  I went to Carmax and they offered me $19K.  Nope, not $21 but faily close.  With Carmax's offer in hand, I went to a local dealer.  Before we discussed a new car, I had them appraise my Jeep.  Guess what?  They came back offering me $17,500.  I'm sure you can imagine my reaction to that.  So, do not expect the dealer to give you the same price as Carmax.  Fortunately, with that offer letter from Carmax, the Ford dealer matched the price.  Hmm ... since we are talking about Carmax, why not look at their vehilcle inventory?

As Appleman notes, the negative equity will be tough.  In the past, because of my poor credit and high APR, I almost always owed more than the trade-in value.  Fortunately though, I paid down enough where the negative equity wasn't too significant to role into the new car loan.  Do you have any money to put down?  How long before the baby arrives?  The reason I ask is to see if you have time to pay down as much as you can on the current vehicle.  Yes, go to Cap1 as Appleman states.  They will give you a worksheet where you can plug in numbers--i.e. how much you intend to put as a downpayment, how much is your trade-in worth, and how much do you owe.  When you plug in the trade-in value, go back to KBB (or Edmunds) and use the GOOD condition (or the level below the one you originally selected).

I probably wouldn't go to Carmax until you are ready to make this happen.  Their offer will be good for 1 week.

Congratulations to you and the family.

---

Just want to point this out, go to carmax for an appraisal, but try not to purchase there unless you are 100% sure you're getting a good deal on the vehicle or the financing. A lot of the time they are priced quite high. (for example I bought a brand new Jeep with $32K sticker for $24K and traded at 4000 miles for 19K) -> It wound up for sale on a carmax lot used for 24.5K. Clearly overpriced. Furthermore, the dealer is going to open the black book (galves) and offer you what it says, unless you get a higher offer and they decide to match it. If you're at a shady dealer (like the dealer i went to trade the jeep in at initially) they will offer you under that, which is plain obnoxious. For example -> the dealer I bought that jeep from in which I was going to purchase another one from, offer $13,375 when book was $19K. I knew this, and I walked out and traded elsewhere. 

If anything, you can go to galves.com and purchase the weekly subscription for $9.95 and you can punch in your zip, car year and options and it'll spit out a quote. Every single reputable dealer I've ever been to has basically offered me this number. It can be negogiated up if the car truly is in great condition, but usually not the case.

As far as trade, the usual way to calculate how much $ you'll need to finance would be 

Sale price of vehicle -> MINUS

trade in price of vehicle -> Equals

tax liability amount -> PLUS

payoff -> PLUS tax/title/tags.

So for example if you owe 23.4K and trade is $15K and you are looking at a 12K vehicle it'll probably go something like.

12000 -
15000 = 
-3000
+ 23.4K = 20300

basically this would mean to buy a 12K car on 15K trade with you're payoff you're asking someone to finance 20.4K + (title/tags) on a vehicle thats worth half that. I do not forsee this working out in you're favor as even if you managed to somehow find a bank to finance this you'd have a crazy interest rate which brings you back to problem one.


My suggestion : Refinance if possible, usually sale price is used which is higher than trade in terms of value, and you could end up paying WAY less in interest. If anything keep the payment the same but shorten the term so you can pay it down quicker. The only other true way to possibly get out of this would be to find a new car with a $8K+ discount on MSRP and I'd only take that route if interest was in a low range.

[Anonymous]

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My suggestion : Refinance if possible, usually sale price is used which is higher than trade in terms of value, and you could end up paying WAY less in interest. If anything keep the payment the same but shorten the term so you can pay it down quicker. The only other true way to possibly get out of this would be to find a new car with a $8K+ discount on MSRP and I'd only take that route if interest was in a low range.

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Well I took your suggestion and Refinanced my Dodge today. 

Dropped from 15% for 72 months (with 65 months remaining)

to 5.25% for 60 months. 

I'm shaving almost $150 off my monthly Payment. 

I think at this point ( at least for the next 8 months) I'm going to attempt to pay down my car as quickly as I can and try and get on top of it's value. Since tax time is coming around that's $3-4K I could dump into the principle of the car. Is that a good idea? Or should I keep looking to trade out?