Is there any way I can get a cheaper car payment?

Question

I drive a 2005 Hyandi Tiburion. It has around 30,000 miles on it. I looked on Blue Book and trade in value is around $11,000 and I still owe around $15,000 . My currenty payment is $366.68 a month, which estimates to around 4 years left. Is there any change I could trade in for something cheaper?

Answer 1

You could try to trade it in for a less expensive car, but since you are upside down, that $4000 worth of negative equity would be added to your next car purchase, so in the end it may not be worth your while. For example, just to break even you would have to trade in your Tiburon for a $7000 car ($7000 + $4000 in negative equity = $11000 loan). So you'd basically have to look at cars $6000 and below to make a significant dent in your monthly payment. This is assuming the interest rate is the same as your current loan, but considering you'd be borrowing more than the car is worth (a risky proposition for a lender), you may be looking at an even higher interest rate.

Sorry, but I don't see any easy way out of this. Anything you might do now (trading it in or refinancing) is going to ultimately cost you even more money down the line. I would suggest you look for other expenses in your life that you could cut down on (cable tv, eating out, etc) and instead use that money to pay off your car loan early, and consider it a lesson learned. It's not a quick or easy solution, but it WILL save you money in the long run. Here's an online calculator which shows you how much you will save over the life of the loan by making extra payments, it's very eye opening: http://www.lendingtree.com/cec/tools/Inline_Calculators/AutoPayoff.asp

Answer 2

You actually have a couple of options. First, let's say that you want to keep your current car. What's your interest rate on that car? If it is a higher one, try shopping around at different banks and see if they can offer you a lower one. Just about every major bank has all their loan rates posted on the web site. If you can get a loan for $15000 and have a lower interest rate, your payments will be lower. Just shop around.

The other option is selling. Especially now with the new model years coming out, you could have a car dealership pay the rest of your loan off if you buy a car from them. I can't remember which ones do this, but there are a handfull of dealerships that will "pay off your trade no matter how much you owe." So, you could try that. You might have to buy one of their cars, but at least then you can get a car for what it's worth, and not find yourself in this position again.

And a tip: don't get a car loan for anything over three years. I got a loan for 5 years because the monthly payments were low and ran into the same problem you did. I caught it before it got too bad, but that was the reason it happened.

Hope this helps

Answer 3

No, you cannot trade. Dealers need to take a large profit from you if you trade, and you cannot afford that.

If you're like most people, you'll just have to pay for it, and later that experience will serve you well the next time you want to plunge yourself into debt.

If you have money, or something to use for collateral that's not depreciating, then make decisions about your transportation costs that don't include this stuff about "I owe more than the car is worth." In that case you could just pay the car off, and then decide if you want to sell it for $11,000 and buy yourself a $500 car. You could do that if you weren't using it for collateral.

Answer 4

don't trade it in. sell it yourself, that's the only way you might get what you owe on it and then get a cheaper car. I