I have a SUV that I owe $26k on a auto loan from my CU. I recently lost my 2nd job and just cannot afford the $400/mo payments on it. I'm thinking of trading it in for a cheaper car to lower my monthly payments. If this is possible, will it affect my credit rating? Say, I trade in my SUV at $20k which leaves me with a $6k balance at my CU. Will having this $6k balance affect my chances of getting financed for a cheaper car at $5k to $7k range? Thanks for your help. EQ=615 TU=? EX=? 2 lates on a consumer card that I paid off balance last March.
Since an auto loan is secured, there will be no balance left at the credit union. They will require that the loan be paid in full prior to releasing the title to the new buyer. You will either need to come up with the $6000 in negative equity OR roll over the negative equity (6000) into a new loan. However, you can see the pitfall here. A cheaper car? $17000 + $6000 = $23,000 new cheaper car. So, will be hard to get lower payments this way. Also, with a score in the low 600's financing will be in the 9-18% bracket. Tough situation. I wish you luck.
Sorry missed the $5-7K range for new car. Still same situation, $7000 + $6000 = $13000 There may be more room for a dealer to work on a trade-in basis and get you financed. Please let us know how things work out.
I don't think you can trade in the car and still have a $6k balance with the CU. They won't release the titile unless the payoff balance is paid in full. So, plan B mighg be that they dealership will get you out of your vehicle and then attached that $6000 in negative equity to your new car. So, a $6k car has just turned into a $12 car. The payments on that would depend on the interest rate you get and the number of years you finance over. If you get a high interest rate due to a low credit score, then the payments on a $12k loan at 17% over 48 months (assuming a $6k car is probably older in years and the older the car, the few years you want to pay on it) would be $347 with zero down. So I guess the bottom line is, you would be driving a less nicer vehicle (going from a $26K+ SUV to a $6k hooptie?) and cutting your payments by $53! You might save in insurance but what's $53?
Thanks for the replies. I guess I'll have to liquidate some assets to come up with a $6k down payment.
