Trading in a car you owe on?

[StartingOver10]

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@amclaughlin42 wrote:

I forgot to mention the dealer cause 30 some odd inquiries alone on my credit, not to mention my wifes credit as well. Its the reason we have to wait so long to get a mortgage. which thats atleast 2 years out. 

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If your current score is above 620 for your FICO mortgage score (mid score only), then you can get a mortgage score-wise. You don't have to wait for the 30 inq's to drop off either you only have to explain where they came from (auto shopping).

I don't want to hijack your auto loan thread, but go over to the mortgage section and you will see that 30 inq's won't stop you from getting a mortgage.

DTI is the issue that many people run into...but that is something else. So when you refi or get a new vehicle, make sure the payment is affordable (as you are working on it now).

[dabrian]

This is a new car with no air conditioning?

[Anonymous]

The base dart doesn't include air conditioning! At 18K!

I didn't believe it I had to google it to be sure. 

[Hoya08]

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@CH-7-Mission-Accomplished wrote:

How would you get Penfed to refinance a car worth 11K with an 18K loan balance?  They do look at loan to value ratio and it is generally at or near 100%, meaning 11K max loan.  Am I missing something??

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Unless PenFED has changed their policies, a 'new' auto refinance (1st owner and 2016 or 2015 models) is treated as a 'new' auto purchase.  If it was a 'used' auto refiannce (not the 1st owner, or 2014 and earlier models), then the maximum loan is based on NADA retail value, which may be in the 14k-15k.

[Anonymous]

Don't take this the wrong way but you really need to get someone to assist you next time you buy a car, by now you figured out you got a terrible deal on the origional price and APR and on top of that the car is not working properly or did not come with equipment you thought it had.  The big problem with the negative equity is  your going to pay that 8k one way or another.  Getting it rolled into the next loan is possible to some extent but you will be upside down on the next car also unless you put a big chunk of cash down.  If the current car has AC and power windows but they dont work the best option is probably to get them fixed, refinance the car at a lower APR and then get rid of it when your no longer upside down.  If that is not an option and you don't have a big chunk of cash to put down you can look for a car with a big rebate to offset the negative equity, this is not something I suggest but it is an option. Buying a car when you have to get one is a tough spot to be in an unfortunately dealers really take advantage of folks in that situation, particuarly so when they have subprime credit.  I always suggest building a relationship with a credit union and getting prequalified through them before you shop, this gives you some leverage and you at least know what you can and cannot afford, what your APR is etc.  Dealers will mark up APRs on folks in your situation so having secured financing in advance provides some protection against this even if you end up letting them match or beat the CU financing.  If you buy new then consider using one of the services like Truecar or Costco's service to help get you a good price, if your an expert negotiator you could probably beat their pricing but most cannot.

[amclaughlin42]

It's not we can't afford our bills because we can. We could only put about $500 down. My wife got her very little income back. The child support her ex owed her. He's been out of work for sometime due a work related injury but now he's back. That's $300 a month that goes towards bills, food, and school clothes for my step daughter. I have my auto loan and one credit card my debt is $475 monthly. My DTI is 15% at this current time. We are looking at 2011 Kia Sorento for $18,999 plus roughly $8000 we owe would put us almost to $450 a month. We are fine with that since we get some extra features. However that only if we can 6% APR. THE 630 score is with my card also almost maxed out. It's not but capital one changed my statement date on me to September 7th. So my paid off balance won't reflect my score until then. However we are bringing this with us to the dealer. If we wanted to try and get this loan through bank how would we do that. Would we get a better rate? 

Also thank you for the information about the mortgage. Much helpful. My score will be ine 700s by then. Atleast 720s 

[Creditaddict]

Have you called a local bank and asked them the most they would lend on a 2011 Kia Sorento because wrapping $8k into a loan is not as simple as dti and affording the payment.

[amclaughlin42]

I am aware, I know a lot of other things take into account, we would gladly take another vehichle if we couldn't get that one, What is the likely APR I would get with my current score?

[Anonymous]

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@amclaughlin42 wrote:

We are looking at 2011 Kia Sorento for $18,999 plus roughly $8000 we owe would put us almost to $450 a month. We are fine with that since we get some extra features. However that only if we can 6% APR. THE 630 score is with my card also almost maxed out. It's not but capital one changed my statement date on me to September 7th. So my paid off balance won't reflect my score until then. However we are bringing this with us to the dealer. If we wanted to try and get this loan through bank how would we do that. Would we get a better rate? 

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Since you are at the limit financially, I really recommend you buy a much cheaper car. A 5 year old car for 19K at 6% is going to cost you over 3K in interest, and that's before tax and title, and without any of the negative equity you currently own. 

There are plenty of cheaper low maintenance vehicles to be had under 10K that you have all the features you NEED not WANT. E.G., I WANT heated leather seats, but buying an SUV with that required going up a package that was not economically wise. 

If you HAVE to have an AWD SUV, find an older CRV or Rav-4. You can find good deals on them and a ten year old one well maintained will be more reliable than a 5 year old kia, plus you won't be stuck in a 5 year loan, and if you are you won't 1. pay as much interest 2. have such a high payment. 

Dealer financing is a sucker's game if you don't have excellent credit, and even then most places try to screw you out of an extra% here and there. I recommend you work with your credit union before you go back, and make some monster payments on your dart to get it out from underwater. Also, the summer is pretty much over so the A/C thing is not that big of a deal, and cruise control is not a reason to make another bad car decision. 

[Hoya08]

You seem intent on trading in your car. 

Banks generaly will finance up to 110% LTV (some up to 120% LTV) of the retail value of NEW cars!  This includes taxes, license, and doc fees, if you wish to include them in the loan. 

If you find a lender willing to lend up to or above the 100% LTV threshold on a USED car, you will still require a down payment more than $500.  Your down payment is the difference of the sale price plus negative equity owed and the max LTV allowed:

$18,999 (assume is the retail value and sale price) + $8,000 (equity owed) - $18,999 (assume max 100% LTV) = $8,000 down payment

In your above post, you're assuming a lender will provide you a 140% LTV (($18,999 + $8,000)/$18,999), a sub-prime lender may oblige you, but regular banks/CUs will more than likley not. 

You need to contact your bank/CU to determine the value of the car your interested in, and the max LTV they'll lend.  For example, while searching for a particular 2000 model car, I contacted USAA for their assessed retail value (they requested mileage and VIN) and their max LTV on each model I was interested in.

Afterwards, you need to figure how to eliminate the negative equity: negotiate a lower sale price, negotiate a higher trade-in value, auto rebates (if any), sell the current car privately to minimize the negative quity, or a larger down payment.