Which is better

[Anonymous]

I have a vehicle, 2012 Dodge Journey, that is about $6500 upside down on the current loan 17% with Santander. I'm in the process of new car shopping. I applied for and was approved an auto loan last December and was approved 8.9% but walked away. I went into credit repair mode and am about 60 pts higher now than then, 683 now. From my taxes, I have about 6k in the bank. So my question is would I be better off paying the 6k towards my current auto loan to get to a break even point on trade in or using the 6k as down payment and trading in a 6500 upside down vehicle ? Or would it even matter because the amount financed will still come out to be the same.

[MrsCHX]

Get out of that bad loan!!

[Anonymous]

I looked at a refi last October, but with it that far upside down, it's a no go. Seems the longer I keep the car, the more upside down I get. :-(

[nycplayboy78]

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@Anonymous wrote:
I have a vehicle, 2012 Dodge Journey, that is about $6500 upside down on the current loan 17% with Santander. I'm in the process of new car shopping. I applied for and was approved an auto loan last December and was approved 8.9% but walked away. I went into credit repair mode and am about 60 pts higher now than then, 683 now. From my taxes, I have about 6k in the bank. So my question is would I be better off paying the 6k towards my current auto loan to get to a break even point on trade in or using the 6k as down payment and trading in a 6500 upside down vehicle ? Or would it even matter because the amount financed will still come out to be the same.

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SCREAMS-n-FAINTS!!!! Use your $6k tax money to pay off that crappy loan and then use the PIF car as a trade-in for the new car and get a better car and term/rates. I would see what DCU has to offer you as well as your local credit unions.....

[MrsCHX]

+1

Don't refi the existing loan. Get from under it.

Pay off the loan. Sell the car (can probably get more selling it yourself than trading it in) and get the replacement car with better rates.

Agree that at 680 you can get approved through capital one or a credit union.

But definitely get out of that loan first.

[Anonymous]

The 6k won't pay the car off, it will only correct the balance(14,700) to a not upside down state. Even after the 6k payment, I'll still owe roughly what I could get for the car at trade in as opposed to owing 6500 more than I could get at trade in( have already been offered 7k for the car at trade in when I was approved at 8.9% when car shopping before).

[StartingOver10]

Pay down the current loan so that you can sell it private party or to Carmax or to one of the car buying services around now.  You want that loan you have to show paid in full.

You have done a great job of getting your score up enough to get a good loan at a CU. Once you have paid down the loan and sold the vehicle so the balance is paid off, get your CU approval and go shopping for another vehicle with the CU approval in hand.

It makes you a cash buyer so you can get a better deal. [Don't tell them you are cash until the very end or they don't negotiate as much]  Also if you have already handled the negative equity on the previous vehicle by paying off the loan and selling the vehicle you won't have the issue of the car dealer adding neg equity to your new purchase. That is the biggest reason why you don't want to trade in your current vehicle - trading will start you off with a bunch of negative equity and cause you to have a higher payment.