Trade In - Negative Equity Advice

[Anonymous]

I'm torn and hoping to get some feedback. This board is great. And I know, another negative equity scenario (I did read through a bunch), but hear me out  

I have a BMW currently just under 60k miles and owe about 19k.  Trade in estimate to be 15-16k. I'm upside down up to 4k likely. It was bought at the beginning of my credit turn around at a 9.5% apr. I was convinced I earned the car, ha. Now thanks to the boards and ton of education financially, I do not want to continue paying the next 42 months at 550/mo for a now out of warranty BMW. I want no debt. That is my goal, more money towards debt. My options from what I can see are: 

1.  Refi, but my payment is not likely to change dramatically / mo unless I extend the terms, which I do not want. 

2.  Roll over the negative equity into a lease. I am looking at the very base LX civic which is 2k down and 139/mo. Little maintenance and a warranty.  Add the negative equity, walk away in 3 years back at zero and anticipated to be debt free (or very close). What point would make this worth it? A final monthly of 250-300 is what i estimate and an additional 250-300/mo saved. Typically, I am wary of leasing and would usually shun it immediately, but the assurance of a new car at a low price is enticing. I commute about 30mi/day. 

3.  There is also 2009 Honda Civic Ex w/ 95k mi. I know a timing belt will be needed, and then take on the maintenance and care and the unknown. This is $10.5k Add my negative equity finance at 60-72mos at about 14k (only to get the lowest monthly). I only want this car as long as it takes me to pay my debts (about 3-4yrs) and will likely end up again w/ negative equity (viscious cycle). With 2k down, estimates are about 200/mo @ 72mos. 

4. Keep my car, suck it up and have a postive asset in 42 months about approx 10k (generously) but still have a good chunk of student loans and who knows how much in repairs over 3.5 years. 

I have one credit card w/ a 10.5k balance at 15% and its the death of me. I dont qualify yet for BT. I also have about 30k in student loans (at only 2-3%)

[dabrian]

Try to sell the car yourself and buy a cheap beater car.

[Dj4Money]

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@Anonymous wrote:

I'm torn and hoping to get some feedback. This board is great. And I know, another negative equity scenario (I did read through a bunch), but hear me out  

I have a BMW currently just under 60k miles and owe about 19k.  Trade in estimate to be 15-16k. I'm upside down up to 4k likely. It was bought at the beginning of my credit turn around at a 9.5% apr. I was convinced I earned the car, ha. Now thanks to the boards and ton of education financially, I do not want to continue paying the next 42 months at 550/mo for a now out of warranty BMW. I want no debt. That is my goal, more money towards debt. My options from what I can see are: 

1.  Refi, but my payment is not likely to change dramatically / mo unless I extend the terms, which I do not want. 

2.  Roll over the negative equity into a lease. I am looking at the very base LX civic which is 2k down and 139/mo. Little maintenance and a warranty.  Add the negative equity, walk away in 3 years back at zero and anticipated to be debt free (or very close). What point would make this worth it? A final monthly of 250-300 is what i estimate and an additional 250-300/mo saved. Typically, I am wary of leasing and would usually shun it immediately, but the assurance of a new car at a low price is enticing. I commute about 30mi/day. 

@3.  There is also 2009 Honda Civic Ex w/ 95k mi. I know a timing belt will be needed, and then take on the maintenance and care and the unknown. This is $10.5k Add my negative equity finance at 60-72mos at about 14k (only to get the lowest monthly). I only want this car as long as it takes me to pay my debts (about 3-4yrs) and will likely end up again w/ negative equity (viscious cycle). With 2k down, estimates are about 200/mo @ 72mos. 

4. Keep my car, suck it up and have a postive asset in 42 months about approx 10k (generously) but still have a good chunk of student loans and who knows how much in repairs over 3.5 years. 

I have one credit card w/ a 10.5k balance at 15% and its the death of me. I dont qualify yet for BT. I also have about 30k in student loans (at only 2-3%)

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  Do you have any negatives? 

 If not, then re-fi the BMW and then take it to Car Max. BMW's do very well in secondary (used) markets. Looking at your scores, your EX from lenders that pull it will cut your interest rate in half.

 Don't carry balances on your credit card and you won't pay interest rates. If your utilization is above 30%, that is hurting your score.

 How much are your debts in total? The lowest I would go on a used car is $5,000. That will get you an early 00's Honda Civic in good condition, right around 100,000 miles but if it's taken care of, it will easily last another 100,000.

 You can put the rest of the money on your debts.

[Anonymous]

Thanks for the input. Happy New Year.

I think I will go for the cheap inexpensive car. Im going to keep searching for something less than 10k.. In the meantime, do you think I should re-finance now with my scores or wait 6 months for my scores to be a bit higher? (new credit card history and lower utlization). I would try and sell the car myself but dealing w/ a transaction that high in person makes me nervous. I also live in a big city w/ not the best crime record. I may just be being a chicken, but I will put it on CL and see who responds. 

I don't carry balances at all anymore, that CC balance is from many moons ago that I need to get rid of. My current utilization is about 45%. My total debts are the 10.5k old credit card balance, the 19k car loan, and 30k in student loans. 

[Hoya08]

Is your CC utilization after the statement cuts?  If you don't carry any balances on your CCs by paying infull, submit payments through out the month to reduce your utilizaiton % when the statement cuts.

As for the BMW, what year and model?  I've owned two ('97 & '00) models and never had any issues which required taking them to the dealership.  Mind you I do the maintenance work myself though; they're just machines which can be fixed, nothing mysterious about them.

Try to sell the BMW privately, depending on the year and model, you may eliminate or at least reduce the negative equity.

[Creditaddict]

Id on't know why you would buy a 2009 and then finance it through the end of your life at 72 months!!!

it's $10k, finance it for 36-48 and you will still save some good monthly money from your bmw and you won't be barrying yourself in a more stupider loan.

what about a  prius since you commute so much? you could even go brand new and ge tthe 0% for 60 months and save money monthly and not put yourself underwater for very long since they hold value like crazy AND would come with toyota care which would pay for everything including oil changes for 24 months.

[Anonymous]

i did go look at all the options. I was hesitant to lease, because I'm not a fan of paying for a car that will not be mine. W/ my negative equity and the price of the newer cars it was coming up around 350/mo. That is more than I wanted to spend on this for 3 years to walk away with nothing. (I was shooting for about 250/mo)

The 2009 honda wasn't an option w/ my credit and the negative equity rolled in a new loan with the banks. 

I decided to re-finance. I was approved with Capital One at half the interest rate (I tried Chase as well as 2 CU). I'm saving about 100/mo (450 now). I will keep paying the new monthly plus the 100. Calculators estimate this to be done in 3 years. which is where I would have been with the lease except now in three years the car will be worth 10-12k pif. My car is in really good condition and there is a local shop that I will be taking it going forward. I do have it for sale so if I get a bite that narrows the negative equity enough, I will take it and buy the 2009 honda (or something similar) on a shorter note.

I will continue to pay down the CC, and w/ some doable extra money, it will be done about the 24 month mark. Longer than I wanted, but any new/extra/saved cash will be going to this to get it done sooner.  

thanks all.