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New auto loan with neg equity

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Anonymous
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New auto loan with neg equity

So I used to work sales for a Nissan dealer and they conned me into a really crappy auto loan. 21.14% on a 15 Nissan Sentra. I really dislike my car and my interest. I can afford my high payment (480) but I really don't want to pay that for a car I seriously dislike. My credit has improved, and I know it's not a for sure approval but I did capital ones pre approval site and they're showing me at 24,000. And it got me thinking.. My car is definitely quite in the negative, but honestly if I could get the approval for 24k and I went for a car around 18kish and added the negative equity on my car payment would still actually drop and I would have a car I like. I realize this probably isn't a great situation by any means but I would like some advice on if it's something that could work.

The year and miles and condition are very comparable to my current car as well so I wouldn't be downgrading or anything. I realize if I did this the car I chose would immediately be in the red too but the way I see it is that it would be pretty hard to refinance such a bad loan and even if I could I don't want this car for the remainder of its term regardless and doing this would atleast give me a car I would want to keep long after its paid off.

Any advice would be super super appreciated
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Anonymous
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Re: New auto loan with neg equity


@Anonymous wrote:
So I used to work sales for a Nissan dealer and they conned me into a really crappy auto loan. 21.14% on a 15 Nissan Sentra. I really dislike my car and my interest. I can afford my high payment (480) but I really don't want to pay that for a car I seriously dislike. My credit has improved, and I know it's not a for sure approval but I did capital ones pre approval site and they're showing me at 24,000. And it got me thinking.. My car is definitely quite in the negative, but honestly if I could get the approval for 24k and I went for a car around 18kish and added the negative equity on my car payment would still actually drop and I would have a car I like. I realize this probably isn't a great situation by any means but I would like some advice on if it's something that could work.

The year and miles and condition are very comparable to my current car as well so I wouldn't be downgrading or anything. I realize if I did this the car I chose would immediately be in the red too but the way I see it is that it would be pretty hard to refinance such a bad loan and even if I could I don't want this car for the remainder of its term regardless and doing this would atleast give me a car I would want to keep long after its paid off.

Any advice would be super super appreciated

Your plan while it sounds great will run into one major problem.  Banks have limits on how much they will finance over the actual value of the new car. If Capital One has approved you for a $24K loanthey want that to be used for a vehicle close to that value, not $18K.  They will finance some negative equity but $6K would represent 133% of the new car and that's assuming it's value is $18K when it probably us worth several thousand dollars less than that.  You need to get an accurate value on your current car (might try CarMax) so that you know exactly what negative equity you're dealing with instead of guessing.  You can then try to trade it in but be prepared to be told that you either need to pit quite a bit of cash down or that the loan you want isn't possible.  At some point the only way to really get out if negative equity is by paying off that difference one way or another.

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Anonymous
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Re: New auto loan with neg equity

Yeah I was kinda worried that could be the case. From my experience I thought it was kinda like hey you're approved to spend xx and they give you the check to spend up to said amount. I'm worried my car could actually be over 6k in the red. It's really sad that I've made close to a years worth of on time payments and my payoff quote has actually increased since the time of purchase.
Message 3 of 3
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