My car is worth more than I owe. Want a new car to lower payments. What are my options? More info inside

Ask the Hackrs
1

I have a 2015 Subaru WRX which has about $18,700 left to pay off and I pay $398 per month with 3.69% interest. I took a 72 month loan out on it, which I regret but you live and you learn. I still have 51 months left on it.

I’m currently financing a car that’s worth more than I owe but still has 4 years left to pay off. The KBB value is almost 7k more than what I owe, but obviously I’m not going to get that as a trade in value through a dealer, so optimistically, I’m expecting like 3k-4k, rather than 7k.

I’m able to afford the payments, but they’re just higher than I want to pay monthly and would rather save that money for better and more important things in my life. I wish younger, less mature me would have thought of that beforehand.

I’m hoping it’s possible to trade my car in and either lease a car with monthly payments that are between $100-$200 less than what I pay now, but I’m honestly not really sure how leases work and how good of an option they are, especially in my particular situation. Am I better off selling my car privately?

I am considering refinancing, but how much lower could that possible drop my interest rate and monthly payments? I’m afraid of applying to refinance and it not being a drastic enough decrease to be worth it, and then hurting my credit score for no reason. If that happens, then I’ll still have to/want to trade my car in but I’ll have an extra hit on my credit score.

Any input you guys can provide will be greatly appreciated. Thank you in advance.

2

I am sort of dealing with the same thing, in my case my Accent is not what I really wanted. I like the car but I rather have something else.

Don’t believe for a second you can’t get full trade-in value. Treat this in same 4 square way Dealers deal with you.

Each section is separate -

  1. Price
  2. Down Payment or Trade Value
  3. Term
  4. How you want to pay (Purchase or Lease)

A lease is no different as they would roll any negative equity into the lease itself. So getting the dealer to pay off your WRX is the goal and don’t believe for a second that isn’t possible.

You ask about refinancing, I did this because my loan was subprime. If your FICO score is over 650 you might want to consider joining a credit union. My credit union re-financed my car and also gave me a credit card all on the same credit pull.

Have you identified what you want? Obviously you want a performance car. Having gone from a 380whp Neon SRT-4 to a 138 hp Accent Sport, ummm the lack of performance is noticeable to say the least

Age doesn’t have much to do with it, I like fast cars and I’m 45. Today’s FWD performance cars are practical and don’t use nearly as much fuel as traditional performance cars. For example the VW GTI 4 door is excellent family car, lots of cargo space, four doors, the rear doors open wider for better access.

It’s no accident that Honda sells more Civic Si’s as a sedan more than a coupe, young families are buying these; explained by market research IE the average age of the people buying cars like the Civic SI sedan, GTI and Focus ST is 30 years old.

Anyway identify what you want but remember unless your APR is already fairly low you’ll get some money back by refinancing. But if you want to trade-it-in, getting max trade value IS again a realistic goal.

3

Went to the Subaru dealer today because I thought they would give me a good price on selling my car to them since they churn WRX’s out with no problem at all, and they offered me $19k, when the KBB value is $22.5k minimum. That was very disappointing and unexpected, especially since they sell 2015’s for nearly the same price as the 2016’s since they hold their values very well. I’ve gotta figure out another option, aside from selling privately, which I have no time to do.

I have no negative equity. The car is worth more than I owe, but I think I’m misunderstanding what you’re saying here.

My APR is 3.69% so it is fairly low. I did the math and lowering it to even 0.9% would only save me like $20 a month and that’s not good enough for me.

I actually don’t want a performance car for the time being. It makes no sense to lease a performance car anyways since you can’t do anything to it at all. I’m more into tech packages than performance and the Honda Accord EX is the current car I have in mind.

4

Never go to a dealer, do it all by email.

Never mention your trade.

Talk price, price, price on the new car your want until it’s agreed. Then talk trade and only then. Do it all by email and get it in writing.

You can modify a leased performance car, just don’t cut anything. Keep all your stock parts and re-install before you turn it in.

WRX doesn’t need more than bolt-ons anyway. If you want more performance that requires tearing the engine down, then buy.

Oh an Accord EX Coupe with the V6 is a decent performer. You can get $21-22K for your WRX, just keep trying, email only.

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Anthony_Thomas is correct in that you should treat the trade-in and new purchase independently. I personally don’t even mention that i have a trade-in until the very end once i’m happy with the new car deal. That way the dealership is already invested in you and spent a good amount of time with you and are less likely to blow the deal by super low-balling you on the trade-in. They will still try but your chances are better.

If i was in your shoes, i would take the car to carmax and see what they’re going to offer you. If the number is high and the dealership is offering you less you can pretty much demand the dealership to give you the same price as carmax, they will most likely do it. If the carmax price is significantly lower than what you think you should get, then you’re not realistic about what your car is worth. KBB is not really true market value, it could be significantly off. I never rely on KBB.

Selling privately is probably going to result in the best price for your car, but that’s a headache and people are going to jerk you around, want to test drive, etc. If you can get close to private party money from the dealership its worth it just to trade it in with the dealership. There are also tax benefits for doing a trade-in.

As far as Anthony_Thomas’ suggestion to do it all by email, the dealership isn’t going to give you anything accurate in terms of trade-in price unless they see the car. I agree however to not step foot into any dealership for negotiating the new car deal. Only by phone and email. Once you’re on their “turf” it’s tough to come out ahead to getting some numbers before you ever step foot into the dealership is critical to getting a good deal.

I think your step 1 is to go to carmax and go from there.

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Tax benefits depend on the state. VA taxes on full price, not net of trade in. And in a lease, you don’t want to put any money down anyway.

7

I wish CarMax wasn’t so far away from my house. There’s only one in the state that I live in and it’s about an hour - hour and a half away. Do you think it’s worth the drive?

What I’ve done so far is go into a Honda dealer and speak to someone about an Accord EX. I just went in to get numbers to see what they can do in terms of pricing and what not, and they told me $225 a month for 36 months/12,000 miles but it was a “today only” offer. After I mentioned I just wanted to get numbers and can’t actually lease the car today, we shook hands and he gave me his card for when I’m ready to come in and actually lease the vehicle.

So they HAVE given me a number, even though it was supposedly a “today only” offer. If I bring my car that I want to trade in, how can I use the quote they gave me to my advantage?

8

“today only” usually is BS, they want you to sign on the spot, however it is the end of the month and some incentives might be going away on the 1st. It’s possible he meant that , but i doubt it. They want you to sign while you’re there.

I think carmax is worth it, you could go to 3 close-by dealerships and just ask them what they’d give you for the car if you decided to get a new one from them and average out the 3 numbers but it’s probably faster just to go to carmax.

9

Carmax offer is good for seven days, so generally speaking it should be worth the drive. Take it through a car wash that makes it look good inside and out for about $40, I bet that is worth at least $200-$300 on trade in offer. The advantage you have of a trade in is it doubles the chance for the dealer to make money. They should be willing to give a bigger discount on the lease in order to mark up your car $5,000 and hope to sell it for $2,500 profit. That is more profit than they will make leasing you a new car.

10

So if you don’t mind me asking, how exactly should I approach a lease with a financed car?

Specifically for my scenario, I owe ~18.8k on it and I’d be happy getting 21k for it, honestly. I don’t plan to put any money down, aside from dealer fees and what not, so could they take the money from the trade in and put it towards that? And then what happens with the rest of the money? Can I take that in a check? I’d rather have it to myself rather than putting it towards the lease.

11

you can take the entire trade in amount as a check or a partial amount. You don’t have to put it towards the new car if you don’t want to. I would put as little as possible down on a lease.

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So I went back to Honda tonight and left pretty disappointed once again.

Their $225/mo for 36/months $0 down & 12k miles offer was no longer on the table. Apparently it was a “Saturday only” offer. Before running my credit score the offer jumped up to $279 a month for the same terms.

After running my credit, the offer jumped up to $331 a month because apparently my credit score is much worse than I anticipated, for some reason, even though I pay all my bills on time and track my credit score on credit karma and it was never as low as they said it was, which is 649. Although it was $331 a month, they said they could help me and drop it to $299 a month, $289 minimum, but I told them it was still too much for me so we shook hands and went our separate ways.

The trade in value of my car they gave me was quite low as well, $20.5k just because it has an aftermarket head unit. I don’t see how an aftermarket head unit could affect the price that much, but whatever. Maybe my expectations for my cars resale value are too high but I’ll be taking it to CarMax to see what they offer and adjust my expectations from there.

I really need to look into why my credit score is low. I wonder if I’m due for my free credit report for this year.

Overall, what do you guys think? Were they trying to screw me at $289 minimum, based on my, somehow, 649 credit score, or is that pretty fair? If I have someone co-sign with me, how much could that possibly drop the price down, assuming their credit score is around 670? I’m really still in shock as to how low my score is. It came out of nowhere. I felt like I was prepared for everything except for that.

13

CK is FAKO, not a real FICO score. You can get your actual score from several places but I highly recommend myFiCO.

Seems to me the money factor climbed on you due to your FICO score.

How many revolving accounts do you have? Credit cards are really the only thing to make your score climb quickly, besides a mortgage.

If you haven’t downloaded your free credit report this year, then I would do that first to see what’s happening.

You can do it for free once a year.

$21.5K is pretty good for your WRX, it’s more than you owe. There’s no rush to sell it because unless your like me and put a ton of miles on a car in a short period of time, you’ll pretty much get the same quote for the next few months.

I can’t suggest what to do credit wise until I know what’s on your report.

Seems the problem here is your FICO score pushing up the money factor. You might want to reconsider if you want to trade out of your WRX now and find a lease company that will allow you to do Multiple Security Deposits to bring your MF down.

In fact if your pay off is $18K and you can get firm $22K, take the $4,000 and put it in MSD to bring down your money factor, that way you can get it back at the end of the lease.

What about a BMW 335i coupe? BMW Finance takes MSD’s…

14

I’ll be getting my credit reports today.

I have 5 revolving account, 4 credit cards and 1 student loan. I’ve been doing a balance transfer from one card to another for a few months (the balance transfer is paying the cards bill and adding it to my 0% interest card), since the interest rate is 0% on the newer card for a year. Could that be negatively affecting me?

I wouldn’t mind getting $21.5k, however, they offered me $20.5k and wouldn’t budge and this was AFTER they priced my car thinking it was a base model and later found out it was a premium model, and they still didn’t change the price. I hardly drive the car at all. This past week I’ve probably driven it more than I have in a few months total and it was only back and forth to dealers.

I’ve never heard of MSD’s so I’d have to familiarize myself with the concept before considering it. How do I know what manufacturers do MSD if it seems like the right option for me?

15

If your doing a balance transfer your credit card utilization might be high. I am not going to get into how it works, you can find out on myFICO, Nerd Wallet and other places. Basically between your four cards you need to have a total utilization (or carried balance) of less than 30%, ideally less than 9% but the sweet spot is 9%-6%

This is especially important when applying for things.

Sorry I meant to say $20.5k. That’s still enough to pay off your loan.

The other issue is going into the dealer without having a deal in place is just a waste of time. You are most concerned about your trade. That’s fine, but you still need to get the price of the car down.

That MUST come first, you are falling into a classic dealer tactic of being a payment buyer.

Only talk about price of the car. When that and the value of your trade is agreed upon, THEN you say I would like to see how much it cost to buy it AND lease it. If they start to waffle on the price, WALK AWAY.

Trust me they will chase you down in the parking lot and make sure you get your keys back once they have evaluated your trade.

Find 10-12 Honda dealers in your area and call them up since today is the end of the month. Tell them you are interested in a Honda Accord Coupe, et-al. Don’t bring up you want to lease, you are interested in buying the car that’s all they need to know about you. if they ask you if your trading in, say no. You may sell it private party or to Car Max they don’t have to know that.

Go to Truecar or Edmunds to get “ball park” pricing. Here’s another thing, getting competitive pricing on a Honda only happens if you pit the dealers against each other. If you were considering an BMW, Audi or Benz, there’s actually a showroom rivalry between those brands and if you threaten you’ll buy from either one of them they will work harder for your deal.

As somebody said on the Focus ST forum, he wanted to lease a ST3 Focus ST (fully loaded) and the dealer said it would be $399 with $1999 due at signing. The poster laugh in the salesman’s face and said he can lease a BMW for that and he’s 100% right.

He ended up at $319 a month, zero drive off. But he spent an entire afternoon cajoling the dealer.

You do not want to pay $399 for a Honda Accord you’ll be driving for three years (or less).

Look at getting a BMW 4 series (coupes) if your willing to pay that much a month.

Finally most high end brands take MSD’s, but so does Ford and GM. Speaking of Ford, what about a Mustang GT?

Explanation - http://f80.bimmerpost.com/forums/showthread.php?t=1158212

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Have you looked at Beepi yet? They make you an offer and if it doesn’t sell after 30 days they buy it off you for the same offer…Many are reporting thousands over CarMax…Newer company but there’s no way they can keep these terms up, I’d imagine sooner or later after they’ll change the terms that after 30 days they’ll still buy it but at like 5% less or they’ll change to a tiered structure, 30 days they’ll pay 90% of their original offer, 60 days they’ll pay 95% of their original offer or 90 days they’ll pay 100%

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Beepi is unfortunately not in my area yet, at least according to their app.

18

So just to clarify, get the value of my trade in by going to CarMax and bring that to dealer to see if they can match or beat it?

But before doing that, go into the dealer only mentioning that you want to finance it? And then once the finance price is settled THEN mention a lease price? Am I understanding that correctly? If I do that, how should I go about the terms of a loan? How much money should I say I want to supposedly put down if I plan to do $0 down on a lease? I just don’t want to make a fool out of myself and have them call my bluff.

How does TrueCar work in terms of leasing a vehicle? Same as financing? Anything to look out for? Also, what IS a good/fair price for a Honda Accord EX?

19

As far as they are concerned you are a cash buyer; no finance, no lease.

No need to go to Car Max because you already have an offer from a dealer of $20.5. You only need to mention that when you start talking about your trade, after you have agreed on price.

You won’t look like a fool.

This is why email works better, but this is the last day of the month, you want to try to get a deal today if possible, if not I would wait until July when the dealers are under more pressure to sell 2016’s.

Call 10-12 dealers, ask them if they have a 2016 Honda Accord Coupe V6 (assuming this is what you want) in the color you want. Once that is established, if they ask if you’ll be coming in today, say that only if your offer is better than the other dealers.

I only mentioned Truecar so you’ll have a ball-park number. If a dealers offer isn’t anywhere near the Trucar price, they aren’t serious about selling you a car for the price your willing to pay.

You can tell them that you have a True Car Certificate (I would get one, it’s free) if you like, if they just won’t give you a price over the phone. If they do give you a price over the phone, give them your email address to get an itemized list of the price.

Don’t worry about financing, that’s not important. Your only concern is price.

You can email 10-12 dealers with a simple email that you’ll be buying today and you want their best offer.

Then you can follow up to make sure they got your email.

Simple Email Script - http://ficoforums.myfico.com/t5/Auto-Loans/How-To-Get-the-Lowest-Price-on-Your-New-Car/td-p/4006801

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@Anthony_Thomas, if you called a dealer for him you can accomplish something in 10 min it will take him 3 days to just figure out and would prob be less time consuming than writing all these long replies and would help him out. Help a brother out lol.

@Moose, Anthony knows what he’s talking about, follow his advice.