Negative equity in my car

[Anonymous]

I basically screwed myself when I purchased my car in 2014. My credit was horrible and I basically bought my car with the worst deal possible. I still owe over 14k on a 2014 Ford Fusion with 142,000 miles. Now I need a new car and need to trade it in I am still rebuilding but really need to trade it in and and overcome the negative equity without having insane interest rates.  My FICO 8 is a 690 according to experian.

[kilroy8]

I would say you are 9-10K underwater,  provided the car is in decent shape.

I don't see a dealer working that into a new deal.

It will need to be paid down a lot before you can trade it in.

[Shooting-For-800]

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@Anonymous wrote:

I basically screwed myself when I purchased my car in 2014. My credit was horrible and I basically bought my car with the worst deal possible. I still owe over 14k on a 2014 Ford Fusion with 142,000 miles. Now I need a new car and need to trade it in I am still rebuilding but really need to trade it in and and overcome the negative equity without having insane interest rates.  My FICO 8 is a 690 according to experian.

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Why do you need a new car at 142k miles?

How much are your payments right now?

How many payments left?

[Anonymous]

What you most likely need to do is give it some maintenance, double up on your payments and ride it out.  142k is not that much on today's cars. Even my old cars I drive (or the people I've passed them down to drive them) forever. I have a 2002 Mustang GT creeping up on 300k.

You've put miles on quickly, but it's still only a 5 year old car. There's a balancing point of miles/age. I've sometimes fared better with a newer car that was driven a ton vs. a 10 year old car that was barely driven. Parts can often fail just as much due to age as they can mileage.

[Anonymous]

My reply is for refinancing your current auto loan to lower payment, interest and get it paid off sooner.

This will help you get it to a point where you could trade it in and burry some negative equity.

You will get approved but for 110 to 120% Loan to value.

DCU uses NADA guide - you can lookup your value there.

Anything you owe over that will have to be paid before the loan is approved.

Now there maybe hope.  I just refinanced my car with a little negative equity $1,400 vs the credit unions max LTV.

They said "Since you just opened a Visa with and requested a $2,500 limit an it's 0% for 6 months then 10% after that let's bumpt that to $5,000 and take the negative equity $1,400 from your credit card line.  No fees to transfer from my Visa with them.  Technically I could have had $5K too much negative equity transfered from the credit card.   I would never consider if it was 20% plus on the Visa but at 0% for 6 months then 10% thereafer it was worth it.  They also would have given me a signature line of credit for 4.5% for at least $7,500 to cover it.

Maybe you can do the same.  It's not a terrible idea because:

• You are paying more than 0% on your current car loan
• You are most likely paying more than 10% on your current car loan too.
• It's 1 pull at a credit union to apply for multiple loans/lines of credit within 30 days or so.

This credit union is Visions Federal Credit Union serving NJ, NY and maybe PA.  You can see if you are elligible to join.

They pull Experian Mortgage score and mine was 691 at the time.  Note that it's a different score than the FICO 8 you are looking at but maybe it's higher, who knows.

DCU uses Equifax mortgage score.

Know your numbers for the score they use before applying then apply for a credit card and if approved you can then apply for the car loan and use funds from the credit card or signature loan to cover the shortage.

Another thing you can do is find the least expensive car you like that gives the most off of sticker right now, then you can burry some negative equity into that car.  

If it's a 30K sticker and you get it for $26K out the door that's at least $4,000 that can be burried.

[Anonymous]

I work on the road which is why I have high miles. I know it was complete ignorange to purchase one at a high interest rate like I did (18%) but I needed a vehicle and I ignorantly bought it. I just recently had my payments lowered from $745.00 to $501.00 when I went back to graduate school which also lowered my interest rate but not much (15.2%) it also changed it to an installment loan with Ford Credit. It is not that I want a different car I am content with mine, it gets amazing MPG. I just want out of this insane interest rate. 

[Anonymous]

Thank you all for the advice. We have several CU's in MS I will check into a loan with them. 

[Shooting-For-800]

Dont buy another car and take another hit to get a better interest rate.

Check Cap One and every credit union you can find to refinance.

How many payments left?

How much do you owe on the car?

[Anonymous]

The vehicle has too many miles for Capital One. How much did you originally finance on this vehicle? Something doesn't add up with the interest rate and payment you said you had. I believe you will have too much inequity to refinance with anyone, a quick look on NADA and assuming the trim level/option's, you probably owe around 4-6k more than retail value which will eliminate the possiblity of refinancing without a significant payment to be made to get the LTV in line.

I would simply recommend paying as much as possible every single month in order to lower the balance as fast as possible. Paying extra will effectively lower the APR of a simple interest loan. Trading for a new vehicle would be possible as some brand's would have enough in rebates to cover the inequity, but you have to ask yourself if that's something you really want to do? You'll be stuck in the same situation as you are now, with a vehicle that is very underwater.

[Anonymous]

My suggestion would be to put every extra dollar you have together each month to make additional payments.  That is the only real way to beat this interest rate without creating more debt.  The car runs, you like it well enough to keep it for a while, try and make double payments each month or an extra payment every other month.  Don't consider another car until this one is paid off or just a few payments from paid off.  You'll get lots of well intended advice to trade it in on a car with a large rebate etc but that won't be a win because that negative equity doesn't just disappear.