New car help, can i pay large amount with check

[Anonymous]

I have a car that is currently 9k upside down and would like to get a new car for a growing family.  Unfortunately, my Credit Union can't (or maybe doesn't want to) let me pay down my principle so any extra payments would just go to future payments.  

Can I negotiate a price with a dealer on a new car, trade in my upside down car and give the dealer a check for 9k (or whatever they determine I am upside down for)?  I do not want to role any negative equity of my current car into the new loan.  

I know I can sell it private party, but that does me no good since I can't make principle payments to the CU.

Thanks

[Kforce]

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@Anonymous wrote:

I have a car that is currently 9k upside down and would like to get a new car for a growing family.  Unfortunately, my Credit Union can't (or maybe doesn't want to) let me pay down my principle so any extra payments would just go to future payments.  

Not as ideal as principle first, however depending on loan and where you are in time, putting the 9k on the loan could save a lot of money and maybe put you right side up.

Can I negotiate a price with a dealer on a new car, trade in my upside down car and give the dealer a check for 9k (or whatever they determine I am upside down for)?  I do not want to role any negative equity of my current car into the new loan.  

Probably but they will take advantage of your situation and you will not get what the car is worth.

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If you let me know the original loan amount, interest rate, term, and date of first payment.

I will let you know what the 9k payment will save you in interest, your new balance, number of remaining payments, etc.

[Anonymous]

Thanks,

Original loan 12/2017
42,300
664/mo payment
4.99 interest
78 mo

[Anonymous]

You can technically always make principle payments, they will apply them as an actual payment but they cannot charge you interest for money you don't owe so it ends up reducing the payoff amount on an accelerated basis.    If you trade in the car you would just write a check for the negative equity which would be applied as a downpayment, I share your thoughts on rolling negative equity into a new car so I have had to write that check before. 

[Kforce]

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@Anonymous wrote:
Original loan 12/2017
$ 42,300
664/mo payment
4.99 interest
78 mo

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$ 42,300 @ 4.99 for 78/mo = ~ $7,000 loss in interest over 78/mo

To date you have paid just shy of $3,000 interest, and still owe about ~$32,700

If $9,000 applied to principal, it would cost ~2,000 in interest and be paid by 11/2022  ($2000 savings)

If $9,000 applied as payments, it will cost ~2,250 in interest and be paid by  12/2022 ($1,750 savings)

[DaveInAZ]

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@Kforce wrote:

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@Anonymous wrote:
Original loan 12/2017
$ 42,300
664/mo payment
4.99 interest
78 mo

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$ 42,300 @ 4.99 for 78/mo = ~ $7,000 loss in interest over 78/mo

To date you have paid just shy of $3,000 interest, and still owe about ~$32,700

If $9,000 applied to principal, it would cost ~2,000 in interest and be paid by 11/2022  ($2000 savings)

If $9,000 applied as payments, it will cost ~2,250 in interest and be paid by  12/2022 ($1,750 savings)

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Very handy with a amortization calculator!

But, @Anonymous wants to trade in the car to one more suited for a growing family. But if the current loan balance is around $32,700 if she pays $9,000 on the loan either way the new loan balance will be around $23,700. The only difference is if the CU requires that to be applied to future payments the new loan balance will still be around $23,700 but she won't have another payment due for 13+ months. If the CU allowed the $9k to be applied to the principal the loan balance would be the same $23,700 but she'd have a payment due next month. Lender can't charge interest they might earn in the future, only the current interest due, so either way the $9k is going against the principal, the only difference is the CU's way is no more payments would be due for 13 months.

So my opinion is pay the $9,000 to the credit union and go car shopping, the car dealer will still have a $23,700 balance to pay off on the trade either way.

[sccredit]

To answer OP's direct question - yes you can cut a check for $9k at the dealer to cover the upside down when trading in.  

[CV91915]

Which credit union is this?