Need some input on trading in with neg equity and which route to take.

[jwiLx]

Hey all. So my situation is this. I am currently paying on a Cap 1 auto loan from 2013. Its a 13' Chevy Sonic. I thought it would be perfect for a family of four. That was up until my kids needed more toys, clothes, a dog, and whatever else they feel they need to bring on camping trips, which we do a lot of. That thing is just way too small for us now. So me and my wife have been thinking of trying to trade-in and go for a new Subaru Crosstrek. As far as the currnt loan goes we still owe about $9300. Trade-in should be in the $7200-$8000 range. But, the car lot we purchased from has a negetive equity deal called the Tonkin Trade-In Plus Equity Program. What it does is cover up to $2500 trade-in protection. So if I am understanding correctly, we should be fine with nothing to carry over right?

I am wondering if maybe we should try and get a preapproval of some sort, maybe go through a CU first before trying to go back through Cap 1. Although I am not 100% bpositive, I think Cap 1 would go through with it before anyone. We havent had any late payments, but since then we have aquaired some CC's and a couple store cards. 3 of them being through Cap 1, including a Kohls card. We pay all of them on time, and the two Cap 1 CC's I pay double weeks early every month, if that makes a difference.

Also we will have $0 to put down off the bat. Im actually ok with higher % rates for the time being until we refinance. And I am unsure of our Fico auto scores, but her TU EQ EX are mid 500', mine are low 600's. ALso forgot to mention we got married since our current loan. Does that make any difference? What I mean is could they go based off her income, but my score? As of now my income is laughable due to being a full+ time student. Her income is around $46000 per year.

I hope this rambling made sense. Any advice? Thank you.

[ds3]

From what you are saying, I would bet your auto-enhanced fico score is higher than you think. It always gives you more leverage and buying power when you go to a dealer with financing already in hand. As far as the negative equity, I have no idea what the Tonkin deal is...do you have to purchase from that same dealer again? One way or another, the dealer is going to try and roll that negative amount into a new car.

It sounds like you'd be best off applying jointly with your wife. In my experience, they will base a new loan off of the highest credit score pulled, and use the combined income. It may depend on the lender, but I can't remember the last time I had to provide proof of income on a car loan. If Cap 1 has been good to you, call them and tell them what you are trying to do. They may surprise you with what they are able to do to keep you as a customer. Definitely apply through your CU as well. Don't be afraid to let the dealer pull your credit and try to beat your preapproval...I have found that they will always offer the best rate overall, but YMMV. 

Best of luck with the new car search! 

[jwiLx]

Thanks for the input. I think I will call Cap 1 first and see what they say. As for the Equity protection prgram from Tonkin, youre correct. You have to buy from them. Which would be fine if they can give me at least the low dollar for my trade-in. The equity protection would make up for it. But like you said, they will figure out how to get that back somewhere else. And I am ok with that for the most part. I wont sign anything unless I am comfortable with what angle they stuck it to me lol.