I hve a car that I owe on. I owe alot more than what it is worth. I am getting ready to start a family so I want a more spacious car. Well I went to a dealership and they said they were going to try and talk to my bank to see if what I owe can go lower. They also said tha tmost likely I will have to pay equity. What exactly is this? Does it mess up your credit in any way? Please help?
Thanks
2006-08-21 05:15:41 · 5 answers · asked by HeaRTbRoKeN 1 in Business & Finance ➔ Credit
Equity is the amount of money you paid in to your loan. If your loan is $5000 and you have it half paid then you have $2500 in equity. The same thing goes for a house. If your house has loan for $300k and you have $200k paid off, you have $200k in equity.
You have probably heard about people refinancing their home or in some cases their car? When interest rates lower, people will often refinance their rates. At that point in time, they can decide if they want to pull some equity out of the loan and spend it on something else. For example, if you are refinancing your home at 6% interest from 8% and you have have 200K of equity already in it, it might make sense to take out $10k and pay off a credit card that is maxed out and is at 19% interest.
The dealer is telling you that you will have to sacrifice money you have already paid in to your loan. This will mean that it wll take you longer to pay off your new loan.
2006-08-21 05:36:27 · answer #1 · answered by Think.for.your.self 7 · 0⤊ 0⤋
My experience and what they are probably telling you is negative equity. When I had traded my Honda in for an SUV I had a $1000 negative equity that they had included into my new loan.
They take the value of your vehicle and find out how much you have left to owe. If your car is worth $2000 and you owe over the value that is your negative equity. If you owe less than the value then you will get a credit, at most dealerships if I am correct.
Be careful some car dealerships. If they know that you are unaware of buying a car, then they will take advantage of you. Always read your contract thoroughly and do not be afraid to ask questions. I have been burned badly when I was younger, because I did not know what to look for.
You can always call the Attorney Generals office and get more information on buying a car and your credit. There are also lawyers that you can call for free advice and information on "Lemon Laws" and other info on car values. Always try to do research yourself and find out the value of your vehicle before trading it in, so that no one can take advantage of you.
Good-Luck!
2006-08-21 06:03:55 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Equity financing is a term used for company's issuance of shares of common or preferred stock to raise money. Equity financing is commonly done when its per share prices are high-the most money that can be raised for the smallest number of shares.
2006-08-21 05:24:42 · answer #3 · answered by Yoruba 3 · 0⤊ 0⤋
equity is the amount of value that you actually own in a property. This means if you sold it , that amount would be yours.
2006-08-21 05:22:58 · answer #4 · answered by vanman8u 5 · 0⤊ 0⤋
fake money..... equity can go up or down ......suppy and demand........
2006-08-21 05:44:27 · answer #5 · answered by ron d 3 · 0⤊ 0⤋