Negative Equity Car Loan - Suggestions Appreciated

[urluckypenny1]

I currently have a 2009 Silverado that I owe $9500 on the loan. The KBB trade in value is $5800 so I'm $3500 roughly negative equity.

Started having a few problems with truck so a little worried. Been looking at other newer trucks 2018 -2020 with less miles around 20-25k price tag. I've never had negative equity so wasn't sure the process and if it's a hole I don't want to get in, even though it's  only $3500

ive got a 767 -754 759 Fico scores , tried the pre approval and was approved, just not sure what to do being I have that negative equity. ? Just ride it out or not. 

I've got 24 months left on loan

[Horseshoez]

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@urluckypenny1 wrote:

I currently have a 2009 Silverado that I owe $9500 on the loan. The KBB trade in value is $5800 so I'm $3500 roughly negative equity.

Started having a few problems with truck so a little worried. Been looking at other newer trucks 2018 -2020 with less miles around 20-25k price tag. I've never had negative equity so wasn't sure the process and if it's a hole I don't want to get in, even though it's  only $3500

ive got a 767 -754 759 Fico scores , tried the pre approval and was approved, just not sure what to do being I have that negative equity. ? Just ride it out or not. 

I've got 24 months left on loan

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I was in your shoes many years ago, more or less.  I leased a sporty little two-door coupe the day before we found out my (soon to be) wife was pregnant; eighteen months later the car was too small for the new/larger car seat for our growing son.  Yeah, I needed a larger car, but only a year and a half into a lease, there was a lot of negative equity; the finance guy at a dealership worked on getting me a financing deal to roll the buyout cost of the smaller car into the lease new sedan.  He warned me this deal would only work out for me if I fulfilled the full 60-months of the new lease; cutting that lease short would repeat the cycle of rolling negative equity into the next vehicle.

The good news is, that sedan was a trooper and easily carried me through the 5-year lease, and I was actually sad to see it go when the time came.

[sccredit]

Everything is going to come down to what the purchase book value is. Lender will only finance a percentage of book value. For some ledners that is 90%, for others it is 130%. You have to find a vehicle that is a good enough deal that the deal after tax, title, license, negative equity, fits inside the lender guidelines. I know my local credit union is 120%, see what your approval LTV term is. 

[cashorcharge]

Short coming up with cash to cover the equity, there are banks that will finance this should you trade the current truck in.  This is typically represented in a percentage called Loan To Value (LTV) as @sccredit commented.  The bank is 'over-allowing' the price of your new purchase with this increased LTV of your new purchase.

If you shop for a "new to you" used truck, the LTV over the sales price is typically not as generous or as high as it would be if you purchased a new truck.  This of course leads to an affordable payment discussion.  

It can certainly be covered and rolled into the price of your new truck....though however it should be noted that now on your new purchase, you'll owe more than what they vehicle is worth so you're compounding the cycle again and again unless you pay the next truck off completely

[urluckypenny1]

Thank you for all the comments! So in the smart sense I should just hang in there until I'm at book value or pay the current vehicle off. 

[FMC]

Your negative equity is actually $3,700, but if you purchase newer used truck how much $ are you putting down? I would think if your putting down 5k with your scores you'll be fine. 
Also is your current truck mechanically sound or a money pit?

[urluckypenny1]

Truck is sound , but recently had to replace radiator and water pump so normal maintenance for the year but didn't want it to turn into a money pit.

I could put 1-2k down didn't want to put $5 k down.