TommyDeVito

Man this topic is just bad to begin with. Keep your car until you're even in it, it's just not worth it to roll credit on to more credit. Very poor financial investment.

vader1

Exactly. If your credit score is 500 the answer is $0 of extra financing. With tighter credit markets your ability to do this is hampered, but if your score is lousy you might not be able to do it at all.

Its your personal choice, but after watching all kinds of people go belly up on the news every night why someone would want to deepen their debt on a rapidly depreciating asset is dubious. If you are talking about a NEW car that will lose at least 20% of its value by just driving it off the lot, you are now WAYYYYYY upside down after 10 minutes of ownership.

Incubus

I agree. It's just hard to coach some people through life, so I didn't say anything.

sparrow

exactly

mxt_77

Hopefully he's planning on getting into a more affordable vehicle so he can pay off that negative equity faster.

Mr.E.G.

When I sold cars, we used 110% of the value of the new car as a general rule of thumb, but I saw as much as 120% or so.

Think about it. If you buying 20k worth of car, is the bank really going to want to finance it for 25K? It creates kind of a risky scenario for the bank whereby if you default on the loan, they now have an asset that they can never sell to reclaim the full value of their money.

The way to roll in the most amount of negative equity is for the dealer to discount the new car by a tremendous amount and you can hide some negative equity in the margin between the price you are paying for the car and the msrp of the car, plus some obvious negative equity on top of that.

Rolling negative equity into a new loan is never a good idea.

Can you describe your specific situation so we can maybe help you find a better alternative?

Scott Evil

This is the best advice.

dparm

Basically.

I would like to just move into a different vehicle for practicality reasons. The S is too hard to use as an only-car, especially in this climate. I may be changing jobs soon to something that requires commuting -- right now I take public transportation.

I have about $4000 in negative equity in the car if I were to trade it, maybe only $2000-2500 if I sell privately. I'd like to dump the car as soon as possible since convertible values slide down hill by the end of June.



Tried to trade it in last weekend but the banks told me I needed to put about $5000 down. And even then it was crappy financing of 8.49% for 63 months. I was able to find a slightly cheaper car and they squeezed it to $3000 down but had about 9% APR. F that.

Do I have any other options? Worst case scenario is that I keep the car for another year by which time I will have some positive equity built. I figure that by next June I will owe around $15000 and the car will be worth $15-16000.

Mr.E.G.

Cut some unnecessary expenses like cable TV and fast food. Send in as much extra money as you can on your payments, and you can turn this thing around in no time.

2 - 4k upside down is not that bad. When I sold cars, I had a would-be client who was 25k upside down... on a mustang. lol, don't ask.

cacophony82

In years past this was much easier. If your being quoted 8-9% apr more then likely your credit worthiness will make doing what you propose very difficult. I would strongly recommend cutting expenses and doubling up your car payments, and selling your car pparty when your above water.

I've rolled negative equity into a new car before, it seems like a great idea at the time, but in hindsight it was needlessly expensive even at 6%. Live and learn. I wouldn't recommend it to anyone. But if someone were to do it the only way i could fathom it, is if you were really credit worthy and you rolled high interest neg equity into a 0.0% or low CPO rate 1.9-3.9.

GL