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So, I bought an Audi A4, racked up some serious miles and starting to get scared of a car payment + insurance + heavy wear and tear expenses.
Here is the dilemma,
I owe $15,000 the car is worth maybe $14,000. So yes I am upside down but thats not the largest issue since I have a savings account.
I have the loan financed at 1.9% and never skipped a beat on my payments, however, my student loans came crashing down, moved to California from Boston and my credit score has taken a SERIOUS beating.
So my theory was, to trade in the vehicle for a pre-owned CPO Honda. Let's say the car is $13,000
So,
Audi (Loan $15000) (Value $14000) New CPO car ($13000),
-$1000 +1000 = 0?
Can I keep my previous loan and conditions? Because I don't think I will get 1.9% again...
I need to know because I live in California and drive a lot, it's only a matter of time...until my time is up and need to act.
The $15K balance on your Audi loan puts a lien on the Audi. When you decides to trade in the car, this is what happens.
Payoff balance of the Audi is determined with a quick phone call. If a Honda dealer offers you $14K for the Audi on the condition of you buying one of their car at X value, the $14K is used to pay off the existing Audi loan first. The excess or shortage will get carry over to your new purchasing sheet. How would you like to pay for your CPO car? Finance/Cash?
The Audi loan is then considered paid off in full and dealer can sell the Audi after a set time period.
You will not keep the same loan conditions. There will be a new loan on the new car. Used cars often carry higher interest rates than new cars. With your credit score "crashing" you are looking at a higher interest rate on a CPO Honda.
Just keep the Audi. You're just digging a bigger I owe money hole. The most you'll see on trade in in 80% of wholesale. Maybe. Dealer will just tack on the difference between trade in value and in your old loan pay off balance to the new loan and you'll be that much deeper in the hole on another car worth even less now. Not only are they making money on the new sale, they are selling ahigher loan amount to the bank and getting a bigger kickback, passing on the risk to the bank AND will sell your Audi to the next guy for 15k while giving you 9k on trade and taking the 6k to your new loan. You just put a whole lot of money in that dealers pocket. In other words you're a sheep bein led to slaughter.. Add in your "Crashing" credit score expect to pay a higher rate to borrow also.
What is causing your financial woes? Bad planning loss of job reduction in pay or simply stupid spending and borrowing?
If you keep the Audi you'd be better off because:
- you don't lose at least $1,000 (plus for trade in dealer will most likely offer less than $14k since they need to make at least $2k)
- you cannot get another loan at 1.9%
- Audi is a better drive than any regular Honda
My advice, rearrange your other expenses to fit your budget, looks like your better off with what you have since you need a car.
Hey OP i'm in the same situation but with a 2013 Mini. Bought in June 2013, 1.9% APR. Fun and cool to drive, but as i'm nearing the 3 year mark it's starting to scare me (the dreaded high maintenance costs). I was also about 5k upside down due to my last trade in.
I think Electrician4you also answered in my thread LOL. I ended up putting 2k in a savings account especially for the Mini (i'm going to add to it as time goes on). I'm not getting an extended warranty. Seems like those warranties cover every mofo'ing thing but THE thing that's wrong with the car.
I'm going to take my chances and keep it until I "zero out" (not roll extra $$ into a new car loan) hopefully by then there will be some good APR plans available.
I have not missed or been late with any payment with the finance company. I used to work for Toyota Financial in the 90's, and sometimes they would let previous TFS customers get in on a decent APR with lates on another account....only because they were not jacking around and kept the TFS account current.
I would just keep it, you are going from one used car to the next though the Honda may be a little less painful. I can't imagine any A4 with "serious miles" netting $14k trade in, sorry.
I have a feeling you will need to pay-off the loan on the Audi and obtain a new loan for the Honda, or any other vehicle, new or used, you decide to purchase.
I disagree about the high mileage Audi being a better car than the Honda. (expensive to maintain!) However, I agree, keep the Audi at this stage.
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