Hey gang...it's been a while since I've been on, but I've found myself in yet another situation... Long story short, I need a new car. Current car: worth $4k owe: $8k (in collections, laid off, but working now) 140,000 mi, starting to get costly probs. I have about $6k liquid to utilize. I'd ultimately like to purchase a new or recently used Honda or something similiar. I believe it would be best to try and work the $8k owed on the old car and lump it on top of the newer one. My credit scores are between 510-540. I can afford a relatively large payment, but wonder what sort of scenerio I should expect given the circumstances. (i.e. Interest, down-payment, etc) Incidentially, I'm near Philly. Any references are graciously appreciated. Thanks all, you're all great.!!
$6K - 4K = $2k, thats a pretty small down payment for poor credit unless you are trying to buy a neon. I found poor credit + poor down payment = high interest rate.
By the way, you always take in the rear on trade-in's. They allow like 10% less then wholesale, it would be in your BEST interest to pay off the car and sell it yourself, then take the cash down on a new car. You'll have a paid off car loan, more $$ for your old car.
Davey, This is what I did. My trade in was only worth half of what I owed, I still managed to buy a brand new car MSRP greater than $25,000 with only $1200 down! I took advantage of both manufacture's and dealer's rebates. I did my homework first and decided which car I wanted and what optional features I wanted. I knew the MSRP when I walked in the dealership. I knew the amount of rebates being offered therefore the salesman couldn't feed me any bull. I decided how much I could reasonably expect for my trade-in and didn't take anything less. I knew my limit on cash down but told the salesman a smaller amount (they always insist on more so I had room to negotiate). Finally although I have bad credit I insisted on 14%. I stated that I have several years of excellent history included a 2 year perfect car loan history. When the dealer said no deal. I walked out! He stopped me and made another offer. I walked away gain. Then he gave me what I wanted! Let them know you will walk if you aren't satisfied. Let know you have cash. They hate to see a deal walk away. There was a side effect. He had to submit my app to numerous places to find someone willing finance for the terms I wanted. But he found one Also this dealer was known for helping people who are upside down with trade-in. Ask around and find the dealers who are experienced in this.
You can find plenty of dealers who will bury your negative equity into a new car deal. The problem is that sub prime lenders don't like to do more than 75 or 80% LTV on a car. So, if you want a 20 k car, plus your -4k equity, lender will only go to 16k (80% ltv) so you have to come up with 8k. Try a late model used car, there is a little more flexibility. With a new car, the dealer can't really fudge the value, but on a used car that's worth 18k, dealer can bury your neg 4k and tell the bank he's selling you the car for 22k. 80% ltv would be 17,600, so you only have to come up with $4400 down. Of course, you're going to get screwed on the interest, but that's another story. BTW, don't bother with on line sources, a good dealership F&I guy is your best bet. Stick with a big dealer. You will have better luck with second tier brands, i.e. Mitsubishi, Nissan, GM. Honda and Toyota dealers can sell all they have all day long to the 700 and 800 club members. They don't have much incentive to go the extra mile to get a difficult deal done.
