Upside Down Advice

[Anonymous]

I am looking for a newer vehicle, 20-25K range preferably AWD/4WD because of where I live (heavy winters). 

My current car is financed - desperately needed a vehicle type of situation after car accident. The dealership tacked on GAP/extended warranty plus other fees that they claimed were "required". If they hadn't done that, I could've had an even trade. I was young & naive, but now more informed. Now, I will be upside on new loan as I will roughly owe $3500 based on KBB/NADA. 

I make about 55K a year with about $3000 saved for down payment. 

My FICO auto is 680, FICO 8 672 & FICO 9 682. 2 CC's, utilization is 31%. Reason for lower scores is late payments 3+ years ago. 

So my question is this a smart thing to do? Will I even get approved?

[Gmood1]

Unless things have changed or it's some how non refundable.

You should be able to cancel the remainder of the extended warranty and get a refund.

Also check Vroom and Carvana offers. IME, they always gave much more than what the dealerships would on a trade in.

You'll get approved. That won't be the issue. Shop for the best rate. And don't let anyone stick you with an unreasonably high rate. Or you'll be walking into the next vehicle upside down, unless pay off is accelerated.

IMHO, avoid buying used in the current market, if possible. Or you'll again dig an even deeper hole. You normally get the lower rates on a brand new vehicle vs a used one anyway.

[Red1Blue]

Try going to a local Credit Union which might give you a better deal and low interest rate on the auto loan. I am sure you'll get it approved

[dunn2500]

as someone who was similarly in your shoes here is what i did

i found highest bidder for my used truck (never is the dealer).....could even be private party

i located my highest auto fico score and specifically found lenders who used them 

almost anyone will get approved just at what rate

contacted 30 dealers some out of state to find best deal on car i wanted

never went to a dealership until i picked up vehicle

takes time but worth it in the end and your doing it from home

credit unions are awesome

if you walk into a dealership not well informed, and basically let them handle financing and trade i promise you will get hosed....they read people like a book and see everyone coming from a mile away ( whether a newbie or seasoned veteran) they know what type a customer you are very quickly....its fine its their job

do your homework, secure your own financing and seek out highest bidder for your trade....thats my advice

dealership wants to make most profit, you want best deal....conflict of interest 

good luck man and all the info is out there for you to get fair deal on both

[4sallypat]

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@dunn2500 wrote:

as someone who was similarly in your shoes here is what i did

i found highest bidder for my used truck (never is the dealer).....could even be private party

i located my highest auto fico score and specifically found lenders who used them 

almost anyone will get approved just at what rate

contacted 30 dealers some out of state to find best deal on car i wanted

never went to a dealership until i picked up vehicle

takes time but worth it in the end and your doing it from home

credit unions are awesome

if you walk into a dealership not well informed, and basically let them handle financing and trade i promise you will get hosed....they read people like a book and see everyone coming from a mile away ( whether a newbie or seasoned veteran) they know what type a customer you are very quickly....its fine its their job

do your homework, secure your own financing and seek out highest bidder for your trade....thats my advice

dealership wants to make most profit, you want best deal....conflict of interest 

good luck man and all the info is out there for you to get fair deal on both

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If you have GAP on your current vehicle, you should not be upside down because the lender will get the entire amount due. 

You should be able to break even ?

As for dealing with another purchase, look at new cars in this market - used car pricing are insane.

@dunn2500 said it best - do your homework BEFORE stepping foot in a dealership otherwise you will get bent over and then some.