Using rebates to hide negative equity

[Anonymous]

Hello everyone,

I am trying to mask some negative equity in my vehicle, solely for the purpose of getting a lower rate now that my credit has improved.

Here's the story...

-I got my car about a year ago, rolled in about 4K negative from my previous vehicle so I was big in the hole soon as I drove off the lot.

-My rate is 9.7. Payoff quote is around 24K. I was just recently approved for 3.9 through a local CU (My auto score is a 712), but they ended up not taking it cause I am way too upside down.

-My payment is relatively high ($489), but it's not the issue. I really want to eliminate a lot of the negative equity, or at least hide it to get a lower rate.

-I understand that the equity is not going to disappear if I use rebates, it will just kind of mask it, at least that's what I've researched.

-I was looking at the 2014 300C  as it has a $5000 bonus cash at this time. I'm anywhere from 4k to 7k upside down depending on what the dealership will offer me. That $5000 bonus should get me within around 110% LTV either way. 

Not sure what rate I will get, hopefully perhaps get the special financing rate or at least use that 3.9 approval I got. The payment would still be relatively close to what I'm at now @ 72 mos. 

I'm just wondering has anyone else done this in here? If so, could you share your experience or any gotchas with me?!

Thanks. 

[Pistons0]

Whats your current car- make, model, options?

Even at best case scenario you say your 4k upside down, I'm assuming you are talking about a leftover 2014 Chrysler 300c RWD ?

Chrysler currently has $5750 in incentives for financing.

So at 4% with no money down at a sticker price minus incentives at $32,500 you're at $510/ month, thats without factoring in taxes or negative equity, with those two included you'll be paying $100 dollars more a month, but if the payment isn't your issue then yes those rebates pretty much mask the neg. equity. 

I had a similiar situation when I leased my current car (2014 Focus), I had rolled negative equity of about 3.5k into the lease of the new car, but had payment limitations, so they found some good factory rebates, customer cash, college student, competitive lease in the household, totaling 2,750, which almost washed the equity, just had to put a 2k down to keep payment in a comfortable range which pretty much covered taxes, first months payment, and about 500 in options. 7 months down the road I couldn't be happier that in two more short years I'm clear of any equity issues and can finally go into the car buying experience not worrying about it.

Neg. equity is a viscious cycle, and with a car booking out at close to 40k, make sure you don't find yourself in the same position in 18 months where you are 8k in the hole instead of 4k. Those 300's are a sharp looking ride I must say but if you get a chance check out the 200's, they're are just as good looking and have similiar rebates and are about 10k cheaper! 

[Anonymous]

Thanks for your reply! I appreciate all the good info!

i will check out the deals on the 200 also, I didn't realize they had rebates also! 

I wonder if if I could also roll into a lease. May have to head to some dealerships soon. 

[RussianPassion]

I can with 5k rebate will depreciate like a car without 5k rebate + $5000... So if you use the rebate to negate the negative equity, you will just carry the same loan amount as you would without the negative and no rebate... In other words it does not make a diff.

The only time rebates help is if you have SOOOO much negative that your loan to value is all out of whack and the dealer applies the rebate to negate the super huge advance.