Marik80

This might be a little off topic but the new car that I want to get is a 2011 TL and was hoping for your expertise help.

I currently own a vehicle that is worth less than what my remaining principle balance is. I am ok with loosing that amount. If I was to get a new car at a dealership, what typically happens is the dealer transfers over the difference in what I owe to a new car payment. That I also understand. My question is this:

I want to buy a car from a friend and have the balance of what I owe carry over to that new loan. I want to do this without using any out of pocket cash. I basically dont want to cover the difference by paying cash. Would rather just increase my monthly payment on a new loan. Is there another way to do this besides dishing out the cash? Thanks

ucf_bronco

iTrader: (1)

What is the KBB value of the car you're buying and what is the price you're paying for it?

Also, how to you plan to get rid of your current car? Are you selling it privately?

Marik80

The price difference between KBB and remaining balance is $6k. I would rather sell privately but the bank the car is financed is not local. From what I understand therefore the transaction between private parties might be a little tough.

I know another option is to get another loan for the remaining balance. But I was just wondering if there is something out there that I am not aware of and easier.

wreak

The way you're explaining this is confusing. So you want to get rid of your current car and get a 2011 TL from a dealership AND a car your friend is selling?

justnspace

iTrader: (1)

cash is king.
and pretty much the only way.


being underwater is never a good idea. and adding that debt to another loan is pretty much suicide.
the best action for you, OP, is to PAY off the remaining balance of the car that you owe.
or, you could find a buyer to take over your remaining balance.

cash is king.

ucf_bronco

iTrader: (1)

He wants to privately sell his current car (which has negative equity of $6k) and buy another car from his friend.

OP, I understand your desire to move forward now with this transaction instead of doing the more financially responsible move of paying down your current loan until you at least have zero equity. My original question was how much equity you will have in the car you are buying from your friend.

However, if you have $6k in negative equity in your current car that question is irrelevant (I'm assuming your friend is not going to sell you his car for $6k under KBB).

I was going to suggest getting a loan for the new car in excess of the value you are paying and use the remainder to pay off the negative equity in your current loan but that seems out of the question. You are too far "underwater" for this to work.

There really is no good answer to your question. You either need to be patient and keep paying your current loan down (ideally by paying more than your regular monthly payment) or get a second loan to cover the negative equity.

Don't sacrifice the future for the present! Hang on to your current car and keep making those payments!

Mr Marco

Sometimes I wonder what happened to the ideals that our elders held. A belief system that focused on the greater good rather than this attitude of self entitlement that some individuals hold today.

OP, you can't afford the car you are driving right now and you wonder how you can buy something more expensive? When people ask me how I could afford such a nice new truck, (as a retired person on a tight budget who works PT) I kindly explain to them that I put half down in CASH. I will never be "upside down" in my Chevy.

How did I get $20K together? While you had your face buried in your fucking GameBoy I was kicking some ass in the middle east, saving every half dollar I made and hoping the total piece of shit I owned would start when I got home.

You can't keep rolling your credit over & over, before you know it you'll be mowed down by the giant snowball you created.

shurik74

+ 1 ^^^

03sixer

OP, listen to these people. They speak the truth. No reason to get even more upside down on the newer TL you want. I know it's tempting to want to get the new car but you'll end up driving it for 2 years and wanting to trade again...and then you'll be $9000 upside down. Pay down your current car...it will get to a point where it's worth as much as payoff. Then, make your move.

012TL-GLM

The phrase you're looking for is *live within your means* and it means nothing to anyone born after 1985.

justnspace

iTrader: (1)

hey!!! i'm an 86'er and I bought my 06 TL to keep for more than 10 years!

012TL-GLM

HA - congratulations! You're in the minority

TacoBello

And will be paying it off for more than 11 years

Booya4139

An acquaintance of mine grew up in the car business. He got a job at a lexus dealer and being the type of guy that wanted to flaunt a fancy lifestyle, he negotiated the purchase of a car he really couldn't afford from the dealership he worked for. (It was a new IS300)... He was low man on the totem pole there and struggled to make the commissions he imagined he would, and eventually left for another dealership. At his next job he was more realistic at his earning potential and realized his current car loan was burying him. So he traded in the car and rolled the loss into a Jeep Wrangler. That ended up not being a particularly practical decision as it was a gas hog and it was very small. (and his payment was ridiculous to boot) So he sold that and rolled two losses into a much cheaper old used car.

I lost track of his progression as it seemed he had a different beater every time i ran into him. But the point was that it was a progressive downward spiral. its like any other kind of debt, it feeds on itself as festers and grows. It was all perfectly foreseeable as well.

live below your means is as valuable a life lesson as you will ever get.

Booya4139

I was laughing imagining Professor Terguson from Back to School in a Sam Kinnison voice as i read this.

justnspace

iTrader: (1)

sucka!

its been paid off.

Mr Marco

lol

sockpuppet

Find a suitable buyer for your friend's car, charge a finder's fee of, say, $500, and apply that money to your current loan.

Then you'll be $500 closer to the surface; you'll still be drowning, but at least there'll be a bit more sunlight getting through.

What the others have said is good advice. If you're underwater, don't swim downward.

screaminz28

iTrader: (1)

Most credit unions will finance 125% of KBB from what I've seen. So, you'd effectively have to have your friend 'overcharge' you by $6250 on a $25K car. Then, you'd have to hope to hell he is really a friend and doesn't keep your $6K since the check would be cut to him. I've yet to find a 'cash-out' auto loan. Look what that did to the mortgage industry!

I've gone the opposite way with my cars. I buy one, drive it and sell it for more $$. Then, buy something else but keep cash out. Rinse repeat and drive a car with no payment.

SinCity-TL

Just out of high school my friends father gave me great advice on financing a car.

After your first car is paid off continue to drive it for a few years but continue the payment in the form of a deposit in a savings account, receiving interest instead of paying interest. When the time comes for a new car put as much down as possible out of the savings, financing little or nothing, but again continue with a payment into savings. Each time this should enable you to purchase a better car, all because the first car was driven a few extra years.

Did not listen but it was good advice.

thePearl

Hi Marik80,

I actually do this for living with my credit union. You need to research your local banks (will suggest Credit Unions) and look up their policies. With my company, for any purchase, we will only finance the amount your are buying the vehicle for plus taxes and any other additional product (gap, extended warranty) only. When i have members under your circumstances, i recommend the following:

1. We do the loan for the new vehicle.
2. With my company, once I run your credit its good for me for the next 30 days, therefore, i see what else we can do.
--- if you have the cash, but dont want to use it to pay off the old loan - We will apply for a secured loan (using your own cash) as the collateral. After 6 months of your auto loan, we will refi that loan with cashout to payoff this secured loan.
--- if the amount difference is little (maybe under $3000), we apply for a credit card and do a "balance transfer" to pay down that negative balance. sometimes this is good for short term as many companies offer initial balance transfer promos.
--- get a personal loan (rates are high as its an unsecured loan), suffer a 6 month high interest, and then refi your new loan with cashout.

hope this makes sense.

thePearl

or do this... some go up to 135% (mine does)

GYac

I was in a similar situation when i bought mine six months ago, I did finance the car, however i sucked it up and paid off the difference in cash plus a little bit so i was not negative when i trade in.

Mr Marco

Hmm, what bank do you work for? Horrible advice for OP and the "Bank" you work for. Google: Enron


Reading this thread prompted me to pay off my auto loan. I figured, the truck is not getting any younger and neither am I. The interest on the loan was costing me more than the bank was paying me for the cash...Now both vehicles are paid off and an asset, rather than A DEBT, which is all the OP has at this point.

OP, stop getting yourself further in debt and learn to live within your means. At some point you will want to purchase real estate. A huge loan on a used car will limit you to a shitty condo in the ghetto.

TheMuffinMan

iTrader: (1)

I don't think that's quite what he's saying. I was incredibly in the negative on my Mazda 3 I had prior to purchasing my TL. It's not that I couldn't afford it, it's that I was piling on the miles faster than you could imagine.

36k miles per year is some seriously mileage.

I could afford the payment no problem, it was a 0% loan, etc. Does that in your opinion mean I couldn't afford the car? I had GAP to cover my ass in the event of an accident and again, didn't have any issues making the payments.

I don't know the OP, but you don't know the OP either - get off your high horse about being military overseas. Any high school drop out can join the military and take a free trip to the desert, it doesn't make you any more or less financially stable than anyone else. In fact, I'd say enlisted people are worse at money management because they have little expenses and are getting consistent paychecks.

I do agree with your last point though, rolling your debt over and over is a terrible idea and it will come back to haunt you. I'd say depending on the amount, doing it once isn't a terrible thing (if that's what you really want to do, but getting in a habit with it is where you get into trouble.

Mr Marco

What? Who's talking shit now? Sounds like you are grasping for a put-down. This is common among individuals who lack a solid defese for their bad money management.
Bottom line...A car is a terrible waste of money, but we all enjoy them. Some individuals have difficulty understanding what they can really afford. Just because the bank will give you the money doesn't mean that you should blow it all on a nice car.
Calling enlisted people worse at money management is a poor attempt at providing an argument.

TheMuffinMan

iTrader: (1)

See below sources, as I stated, many newly enlisted military people don't keep tabs on their expenses and as a result hose themselves monetarily. I was pointing out how silly and inappropriate your "I joined the military and saved money while you played a GameBoy blah blah blah" statement was. Wildly unnecessary and was an unwarranted putdown.

A car isn't a waste of money, a car is generally a necessity to get to and from work. I think what you mean to say is a car is a terrible investment, because it is. Modifications are also a terrible investment - because they aren't investments either.

Sources:

10 Bad Money Habits Recruits Should Boot

Survey reveals troubling numbers of military personnel in debt

and, while opinion, holds very true and illustrates the point I was making -

I'm 19 years old and I want to buy a used car worth ~20k USD. I have no idea how to go about buying one alone.

You are correct again in your second to last statement and that's why there are quite a few people hosed on mortgages. Buying far too much house for what they can afford. Most banks now though are not quite as generous in their loans and have restrictions in place. Mine for example was:

- will not finance more than 130% of KBB trade-in value
- 700 or higher credit score
- debt-to-income of less than 43%
etc

That weeds out a large number of applicants right off the bat.

sockpuppet

Wow...I totally missed the military reference. I just assumed Marco meant that he went overseas to kick ass because he's just a real jerk to foreigners.

Military...see, that makes a lot more sense.

Mr Marco