Masking Negative Equity with Rebates????

[Anonymous]

Hi, 

So I am currently upside down in an auto loan for a 2016 Chevy Cruze about $4,000-5,000 (owe $9,000 & trade in value in $5,000 range). At the time, my credit was TERRIBLE so I have a 22.99% interest rate thus why I am upside down.

I am looking to purchase a newer vehicle, but would need some advice on which steps to take first!

Should I:

- get pre-approved through a bank

- find a car with A LOT of rebates (2019 Hyundai Sonata and 2020 Kia Optimas have lots of rebates in my area currently)

- hope that with the trade in and rebates that I will be able to roll remaining amount on to new auto loan.

I am planning on keeping this new car for a while. Any suggestions?

[Anonymous]

Perfect question because I'm in the same boat too with Santander.

i want to trade in a Mazda CX-3 GT that's been appraised at $13K and I owe $17,500 at 22.3% interest rate. I'm wanting a Nissan Frontier 4x4 and to mask the negative equity with rebates as well. 

[TattnallTrio]

I was recently there. Get the CapOne Auto Navigator preapproval and download the app. It'll show you cars in your area and you can build in the trade with your negative equity. I was $6,500 upside down. 

Most new cars absorbed it, as you guys are saying. 
I went to Ford because they had huge rebates on the Fusion. Ford Credit wanted $5,000 down but CapOne approved it. I told Ford that CapOne is good anywhere and since I wasn't getting the benefits of Ford financing (at the time was $1500 plus they made 3 payments) I was going to shop around. 
Toyota Financial approved me for a new Rav4. The rebates were considered, I didn't put anything down and I financed $36,000 on a 2020 Rav4 XLE with a MSRP of $31,200. So it is possible and they did it. 
Capital One auto navigator's app built my confidence on this. 
Both dealers told me CapOne, Santander and Wells Fargo are their "go to" for negative equity. 

Unrelated but people say "auto inquiries are counted as one" but I applied for a Toyota Visa and was denied due to excessive inquiries now but I got a fair deal. 

[TattnallTrio]

I need to add that my interest rate of 9.59% is higher due to the negative equity 

[Anonymous]

Thanks for the advice! Went ahead and did the CapOne prequalification and started the process! I do have some questions though!

So when I am building my offer, should I call the dealership and see what rebates I may qualify for & all the fees they may have? Or just leave that blank? Is it guaranteed that I will get the financing that CapOne offered?

[Anonymous]

I would get pre-approved from a bank, but first find out what you want to buy without giving into any sales pressure.

I would go in the direction of trying to select a vehicle which doesn't lose value very quickly. You have negative equity. If you buy a car thats 30K and is typically worth 20K after a year You'll be buying that car for 35K and next year when its only worth 20K you'll be more upside down then you are now. Sometimes you gotta do it as your curent vehicle doesn't meet your needs. Make sure what your doing makes financial sense and the money your paying is worth it to you.

[Anonymous]

Thanks for the advice. So when I am looking up vehicles with the best resale value, most are trucks (I need something not as expensive, fuel efficient & reliable) or cars that are a little small for me like a Civic or something (I'm very tall haha).

Also, what do you think about this? Since I'm hoping to keep this car for a while, I could find a nice 2019 at a better interest rate than current, refinance later at a lower rate as I build my credit and payment history, then I'll be paying more on principle and can hopefully turn my upside down situation around?