Trade Ins

noffgurl · June 2015

How would a trade in work? Does that add to your current payment? Right now we owe $9100 on our truck and it its kbb is $7100 trade in. I'm not sure what we really want to get at this point but, would I have to pay the $2k difference right then or add it to your payments? Also, when we got the truck we both had credit scores in the low 5s and we were approved for up to $13,000 and now I have gotten H's in the upper 6s. Would this make a difference?

AprilZ81 · June 2015

Technically you can do either under most circumstances, but I HIGHLY, HIGHLY recommend no financing the difference. You will essentially be paying for a vehicle you no longer own if you finance the amount you are underwater.

If you can't get what you owe for the truck as a trade in try to sell it privately.

abrewer5 · June 2015

I agree with @aprilz81 to try and sell private party versus financing the truck into a new loan. You might also be able to bargin with the dealer on your trade in. I had a friend in a similar situation that with no credit and poor co-signer was given a loan with the highest interest rate allowed in our state, obviously after having the car for 4 years and making payments she didn't even make a dent on the principle and owed more than it was worth.

She went to get a brand new car since she now has better credit and was able to work a deal with the dealership to where they did not roll the other car into the new loan. This is rare, but it might be possible. It helped that her boyfriend and basically his whole family (dad, mom and sister) bought cars within a few months from the same dealer, but I would go to the dealership and talk about your options and see what they could give you.

Xstatic3333 · June 2015

Trade in value is usually less than private sale value, so I bet you'd stand a good chance of breaking even on a private sale. You could also get an estimate at Carmax, which will often offer above trade in value (though it didn't when we sold H's car).

A better credit score will almost certainly lead to lower interest rates and perhaps the option to finance through banks and credit unions instead of just the dealer. In terms of how much you can borrow, debt to income ratios will come into play. I think most will loan people more than is a good idea.

What has you guys thinking about selling the truck?

noffgurl · June 2015

Just wanting something different. Like I said earlier I'm not sure if we will even do it. I would love to be able to get a 4x4 Toyota Highlander but, don't want to spend more than the $400 a month we are already spending. I was considering just refinancing the truck to lower the interest (currently just over 17%) but from what I researched it would actually hurt our credit.

Xstatic3333 · June 2015

noffgurl said:
Just wanting something different. Like I said earlier I'm not sure if we will even do it. I would love to be able to get a 4x4 Toyota Highlander but, don't want to spend more than the $400 a month we are already spending. I was considering just refinancing the truck to lower the interest (currently just over 17%) but from what I researched it would actually hurt our credit.

Hmmm, 17% is rough for a car payment. Not sure of your long-term goals, but *for me* a small credit score hit might be worth considering. Is it just the standard impact you get from opening new accounts?

noffgurl · June 2015

From what could find, it's the standard, but you also run into the impact of closing a somewhat lengthy account and opening a brand new one. So your credit history length takes a hit, not just a hard inquiry.

noffgurl · June 2015

What we may end up doing is when the kids go back up to Utah in July is funnel any and all extra money to the truck and once it's paid off then either trade in or something.

als1982 · June 2015

noffgurl said:

Just wanting something different. Like I said earlier I'm not sure if we will even do it. I would love to be able to get a 4x4 Toyota Highlander but, don't want to spend more than the $400 a month we are already spending. I was considering just refinancing the truck to lower the interest (currently just over 17%) but from what I researched it would actually hurt our credit.

Please, please don't do this. I know you've struggled financially, had issues at work, and are looking into getting help TTC, which could get very expensive. I would hate for an emergency to come up that causes more stress or problems, or you not be able to achieve your family goals, just because you're strapped with a car payment that is much too high for your income.

abrewer5 · June 2015

What are you building your credit up for? Is there a specific large purchase you're going to make in the near future (1-2 years) like a house? If so, then I wouldn't do the re-finance.

If not and you're going to take a small hit to your credit then I would consider doing the re-fi to get rid of the 17% interest and be able to pay more towards principle, but make sure you finance it for whatever time you have left on the loan and not a longer period.

One of the factors affecting my credit score is length of accounts because I'm only 24 and don't have long credit history, but my score is still close to 800. It may not be as big of an impact as you're thinking. I personally would hold off on buying a new/new to you vehicle and see if you can make the truck payment more manageable, unless a new to you vehicle has a significantly smaller payment/interest for the same or shorter term than what the truck has. This is just my opinion thou, I don't know your individual situation.

noffgurl · June 2015

als1982 said:

noffgurl said:

Just wanting something different. Like I said earlier I'm not sure if we will even do it. I would love to be able to get a 4x4 Toyota Highlander but, don't want to spend more than the $400 a month we are already spending. I was considering just refinancing the truck to lower the interest (currently just over 17%) but from what I researched it would actually hurt our credit.

Please, please don't do this. I know you've struggled financially, had issues at work, and are looking into getting help TTC, which could get very expensive. I would hate for an emergency to come up that causes more stress or problems, or you not be able to achieve your family goals, just because you're strapped with a car payment that is much too high for your income.

This is why I don't want a bigger paymebt then we are already doing. I'm not looking for a 2015 car by any means. Older is easier for H to work on. The truck we have is starting to have electrical issues which get tricky so H doesn't always feel comfortable doing the work so of course that gets a bit pricey.

noffgurl · June 2015

abrewer5 said:
What are you building your credit up for? Is there a specific large purchase you're going to make in the near future (1-2 years) like a house? If so, then I wouldn't do the re-finance.
If not and you're going to take a small hit to your credit then I would consider doing the re-fi to get rid of the 17% interest and be able to pay more towards principle, but make sure you finance it for whatever time you have left on the loan and not a longer period.
One of the factors affecting my credit score is length of accounts because I'm only 24 and don't have long credit history, but my score is still close to 800. It may not be as big of an impact as you're thinking. I personally would hold off on buying a new/new to you vehicle and see if you can make the truck payment more manageable, unless a new to you vehicle has a significantly smaller payment/interest for the same or shorter term than what the truck has. This is just my opinion thou, I don't know your individual situation.

We are 24 and 27 and have short histories as well. The reason for building up the credit is to really just have it available to us if we need to purchase a home/finance something else.

als1982 · June 2015

noffgurl said:

als1982 said:

noffgurl said:

Just wanting something different. Like I said earlier I'm not sure if we will even do it. I would love to be able to get a 4x4 Toyota Highlander but, don't want to spend more than the $400 a month we are already spending. I was considering just refinancing the truck to lower the interest (currently just over 17%) but from what I researched it would actually hurt our credit.

Please, please don't do this. I know you've struggled financially, had issues at work, and are looking into getting help TTC, which could get very expensive. I would hate for an emergency to come up that causes more stress or problems, or you not be able to achieve your family goals, just because you're strapped with a car payment that is much too high for your income.

This is why I don't want a bigger paymebt then we are already doing. I'm not looking for a 2015 car by any means. Older is easier for H to work on. The truck we have is starting to have electrical issues which get tricky so H doesn't always feel comfortable doing the work so of course that gets a bit pricey.

If that's the case, I'd pay down the $2,000 that you're underwater and then save up an additional $2,000. Once you've done that, sell the truck yourself and then use the $2,000 to buy a vehicle in full with cash.

brij2006 · June 2015

als1982 said:

noffgurl said:

Just wanting something different. Like I said earlier I'm not sure if we will even do it. I would love to be able to get a 4x4 Toyota Highlander but, don't want to spend more than the $400 a month we are already spending. I was considering just refinancing the truck to lower the interest (currently just over 17%) but from what I researched it would actually hurt our credit.

Please, please don't do this. I know you've struggled financially, had issues at work, and are looking into getting help TTC, which could get very expensive. I would hate for an emergency to come up that causes more stress or problems, or you not be able to achieve your family goals, just because you're strapped with a car payment that is much too high for your income.
This is why I don't want a bigger paymebt then we are already doing. I'm not looking for a 2015 car by any means. Older is easier for H to work on. The truck we have is starting to have electrical issues which get tricky so H doesn't always feel comfortable doing the work so of course that gets a bit pricey.
If that's the case, I'd pay down the $2,000 that you're underwater and then save up an additional $2,000. Once you've done that, sell the truck yourself and then use the $2,000 to buy a vehicle in full with cash.

This is exactly what I would do. Get rid of this ridiculous payment and interest rate on the vehicle, and get yourself something in cash.

As someone who had payments strapping us from the chance and possibility of moving forward with starting our family, you will thank yourself for this. We too had trouble TTC and needed to get treatment. Our payments made it so it was less possible for us to get the help we needed. It was heartbreaking.

Also, you have had some financial strains within the last few years, causing the bad credit score and 17% interest. Change your family tree. Buy a vehicle in cash and get out of that rut. Build yourself some financial wealth by saving money and paying cash for things, and not falling back on credit or worrying about how taking out a car loan will affect your credit score. Your credit doesn't matter when handing over cash to buy a car (or anything for that matter).

I know I'm a big advocate for this, but have you read Dave Ramseys' Total Money Makeover book? It's a great way to get a plan for your finances and know what you should and shouldn't do and when.

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