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My auto dilemma

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Frequent Contributor

My auto dilemma

Here's the back story -- in 2012, I bought a new Kia Soul -- was starting to rebuild my credit and was told having a car loan would help.  Drove that for about 10 months and, well, frankly hated it.

 

In 2013, I traded in for a Nissan Rogue.  Between the negative equity, stupid car shopping, and crappy FICO (probably mid 500s), I financed at a whopping 18 percent interest rate with the Mafia of auto lenders -- GM Financial -- after paying for 2 years, I'm not making any headway on paying down principal and am horribly upside down.   I blew through the 36000 mile warranty and have about 42500 miles on the car.  

 

I still like the Rogue but have 55 months left on the loan and feel like I will not be right side up until pretty close to the last payment.

 

My Ficos have improved significantly since then and talked to a dealer who can get me into a new vehicle with a single digit interest rate and comparable payment.  

 

So is it better to trade in so that I can get a much lower interest rate (but more negative equity) or continue to pay 18 percent for 55 months on a car that has over 40K miles on it (between road trips and daily commute, I'm putting over 20K miles per year on my car -- that includes at least 1 2000-mile road trip per year plus will now be doing more in state road trips since my son is going off to college this fall about 3 hours away).

 

I guess I figure both options are "not great" -- which is the "less great" option from a financial perspective?

 

Thanks for any thoughts y'all may have... 

 

 

Starting Over Again after Cap1 Death Penalty:
06/18/2019:
09/06/2019:
Message 1 of 4
3 REPLIES 3
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Valued Contributor

Re: My auto dilemma

What's the length of the new term the dealer is offering you?  If it is 72 months, I, personally would just stay with GM Financial.

 

If, say, they are offering you 60 months and all is close (payment wise, if that is what interests you), then yes, I would go with it.  Given a lower interest rate, you're going to gain the positive equity faster than you are with the whopper of a rate you have now...

 

I think a lot of it depends on the term of the new option...

BK Discharge 2/11/14

Currently in the garden.
Message 2 of 4
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Frequent Contributor

Re: My auto dilemma

Thanks -- my preference would be to go with 60... but don't know yet.  I'm supposed to stop by tonight to even see if I like the new vehicle.  They did a soft pull on my credit first to see if they could do a deal and give me a chance to decide if this is what I want to do -- something I really appreciated.  Last time, I was stoooopid and went to several different dealers so if you look at my inquiries for that period, I had multiple hard inqs with the same lender on the same day!  Dumb Dumb Dumb on my part.  

 

I forgot to add in my previous post that I had been paying 50 bucks more per month than the monthly payment in the hopes of acquiring more equity but still swimming upstream.

 

Thanks again for weighing in...

Starting Over Again after Cap1 Death Penalty:
06/18/2019:
09/06/2019:
Message 3 of 4
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Valued Contributor

Re: My auto dilemma

understood.

 

If the term is any thing more than 60 months, I would personally avoid it.  And, with GM Financial, are you sure the extra 50 is going to principal?  I know when we had them, if you paid more, it just lowered your next month's payment from them and never really made a dent with the principal balance...

BK Discharge 2/11/14

Currently in the garden.
Message 4 of 4
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