I have a question about getting out of a car payment to get another car?

Question

Hi, my situation is that last august i bought a car for $5,000, i financed with state farm for 3,100 and right now my payments are about $1800 left

My budget has tightned and I would like to get rid of the car and get a cheaper car for around the price of $2000.

I have never done this before and i do not know how it is done and what should be done. is it going to be a big hassle and headache?

please tell me the proper steps to do so. thanks alot

Answer 1

you have to figure a person getting rid of a car that cost $2000.00 chances are it's probably a lemon (which means something is machanically wrong w/ it) now it's possible when you get the $2000 car it WILL run for about 6 months b4 you start to have problems (keep an eye on water pump, they usually go first) my advice? keep the current vehical, pay it off, then try to sell it for say $4000, that way when you buy a new car, a) your down payment will be larger B) monthly payments will be smaller C) MAKING THE PAYMENTS improves your credit,and might get you into a nicer vehical down the road. it'll defintely be a bigger hassle for you if you have to spend even more money just to get the $2000 car running consistantly. and when you sell your current vehical for $4000, someone will be more prone to buy it because they are sure it's not a lemon(pricewise). but if your budget is a large looming issue, and you can't make the payments @ all, you need to contact whoever you got the loan from and let them know the situation, we've missed payments before and one thing i know they can do is work with you, maybe take the current payment and tack it on to the end (of all the payments) so now instead of paying the car off completely when you thought you would, you end up with a extra payment (the one you missed).. good luck
-m

Answer 2

God Bless you...

The first thing that you have to realize is the no matter what car you get, you will still have to pay that remaining $1800--whether you pay it off before you finance the new one, or whether the financer rolls it into your new note. That $1800 doesn't just disappear, and it will have to be paid somehow.

If you are wanting to cheapen your payments with a vehicle of $2000, realizing that you are going to be financing $3800 plus interest, and getting a car that is probably not worth what you are financing, this will be a tough deal. Not saying that it is impossible, but it is tough. The dealer (or you) have to find a vehicle that is cheap enough and yet holds enough value that a lender will loan $3800 on it.

I think your best bet is one of two things. If you can, tighten your belt and pay off the remaining $1800, be free and clear on that car, then trade it or sell it. Or, see if you can get State Farm to refinance your remaining $1800 into a lower payment for you.

Good Luck!

Answer 3

By "cheaper car," do you mean a "more economical car?"
Obviously a car that costs "around $2,000" isn't cheaper than a car with $1,800 balance remaining.

I think your best bet is to pay off the $1,800 car as quickly as you can, then sell it or trade for something else. Chances are you can sell the $1,800 one for a bit more then you owe.

Or, if you've made all your payments on time, the lender who holds the note on the car may be willing to refinance and extend the term of the loan to lower the payments.

Also I don't think you'll find a lot of cars "around $2,000" on a dealer lot, so you're talking about buying from a private party. To finance this you'll probably need to go to a bank or other financial lending institution and get a "signature loan," at a higher interest rate than for a car loan.

Even with a signature loan you may have to carry more than basic liability insurance on your car, be sure to calculate that into the budget.

Answer 4

The best thing to do would be to sell the car yourself. Just make sure the person who is buying it knows the car is bank owned and when you pay it off you can get them the title.

If you have good credit you could go to a bank and see about getting a personal loan to pay off the $1800 that would more than likely lower the monthly payment that you have to pay.

Answer 5

You already have a $2000 car.In fact its only a $1800 car.

Answer 6

Go to NADA guides.com & find out what your car is worth.
Then you can go to a dealer & trade your car for one of less value.
If your present car is worth 4000 & you owe 1800 then .
you have 2200.00 in equity.
If you trade your car for a car costing 2500.00 You will have to pay 300.00 +TT&L
These ar hypothetical figures to give you an idea.