Trade or Sell The LGT ??

Heres my deal. Thinking of a few life changes coming up that involve moving into a Metro area where owning my 2007 LGT 5MT is in excess of what I need.

 

My main goal is to reduce my monthly payment, and pickup a car with slightly less miles on it than the GT, something more economic.

 

My car: 2007 NBP Legacy GT 5MT. Most likely returned to stock unless buyer requests otherwise.

Approx: 40k Miles

KBB Private Sale: $18,050

KBB Trade In:$15,700

 

My car interests:

 

2005,6,7 Subaru Impreza Wagon N/A ~$15k w/ under 20k miles

2005,6,7 Honda Civic Coupe ~$15k w/ under 20k miles

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My Problem:

 

I owe $18,400 and climbing w/ interest on my finance for the GT.

 

When trading in a car to a dealership, do they ever give cash to pay off current loans? Or is it always applied to the new car cost ?

 

Im just wondering what the best course of action is.

 

*Private Sale of GT / Pay Off Loan / Scrounge $$ for Down Payment on new transport.

 

*Trade in GT for huge hit and see what dealer has to offer cost wise.

 

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If i get cash for the GT I will most likely pay off 75% of it, then use the remainder for the down payment on the new car, eventually trying very hard to pay off the rest of the GT loan.

 

This will leave me with a very small monthly on the new car.

 

Any suggestions ?

 

(I cant believe I put $9k into the GT as a down payment only 11 months ago when it was $27k. Now now its worth only $18k and I owe $18k on it Unreal, I shoulda bought a used 06 )

You're "upside down" on the car.

 

From my understanding, you basically have to pay them to take it off your hands ($350 in your case) so that they can pay off your $18,400 in debt on the car.

 

As you probably know, you have to actually pay off a car you're financing if you want to sell it. If you pulled a loan on the vehicle, it's probably the same thing.

 

If what I said is correct (again, just my understanding of what a dealer told my friend about this same situation) you would be better off keeping what you have.

you can't do it like that...you have to pay off the lien on the title before you can sell it.....which means if you traded it in, you'd have to roll over the balance between what is owed on the car and the trade in value as negative equity into the new loan on the "new" car assuming the writer of the loan (the bank) will even approve the loan with the negative equity....

 

and if you sell privately, you need to get another loan to pay down the value of the car to get the title released so the new guy can take delivery (you can't sell a car with a lien on it which is what you have if you owe money on the car to a bank)

you would be better off keeping what you have.

 

+1, at least for another 2 years (when the depreciation catches up with the note or loan on the car)

Sorry man, you are in a bad situation. The 40k miles is what's killing you. My '06 has 26k miles on it and kbb private sale is at around $20k. One option that might be available is to refinance the car. You can stretch out the payment period and reduce your monthly payment. IMHO it's not a very good idea to refi but if you really need to reduce the monthly payment it might be the only way. Personally I would just cut back expense elsewhere and keep the car for a few more years.

So you dont think I could convince someone to give me cash to pay off my loan before I signed the title over to them in a private sale !?!?

Yeah the insurance and monthly is certainly not killing me, but $367/ month at 6 years is crazy.

 

I dunno what I was thinking in the first place i guess

So you dont think I could convince someone to give me cash to pay off my loan before I signed the title over to them in a private sale !?!?

 

What usually happens in this situation is that you would both go to the bank. The bank would have the title ready and he will give the bank the agreed-on purchase price. If the purchase price is less than the payoff amount you would have to give the bank the difference at that time as well. If you don't have the money to cover the difference then you would have to take out a personal loan. Once the original loan is satisfied the bank will give the buyer the title.

So you dont think I could convince someone to give me cash to pay off my loan before I signed the title over to them in a private sale !?!?

 

You can pull a personal loan to do that, which is what I've done in the past. You might also get a lower payment since your payment will be based off the $18,400 (if you pull that much out) instead of the price you paid for your car in the first place.

 

That's another option...

 

EDIT: I do know that through my bank, USAA, I can choose to "refinance" my loan at any time. For instance, if you pulled an $18,000 loan, and you sold your car for $15,000, then your payments on the loan would reflect the $18,000. If you gave $15,000 towards your principle payment on the loan, call your bank and have them "renew" the payments so that the payments now reflect $3000. Just throwing out options for you to juggle. You have many options!

(I cant believe I put $9k into the GT as a down payment only 11 months ago when it was $27k. Now now its worth only $18k and I owe $18k on it Unreal, I shoulda bought a used 06 )

 

Yes you should have. Shame on you.

The loan is through Chase Bank, which Subaru got for me.

 

Maybe if Im looking at the Impreza, Subaru will cut me a deal. It would only make sense if I had $3k-5k to put as a down payment on the new car. Thats really the only way to reduce my payment.

 

In the end Subaru would screw screw screeeeeeeeeeeew me out of my cars value, definitely not worth it.

 

I guess Ill hang onto it, and if I come across some free cash, I can use that to pay down the loan significantly, then maybe if my car is still worth anything I could come out on top.

Thanks Jorge

The problem with taking out a personal loan to payoff the car then sell it is that he still needs to take out another loan to buy another car. He will also have little to no down payment for the new purchase, so he will probably be upside down on that loan from day one. He will end up with 2 loans, the personal loan will most likely charge much higher interest rate as well. I don't think he will be better off in this scenario. Again, IMHO smartest thing is just to keep with the LGT and cut other expenses.

Thanks Jorge

 

Just doing my part in keeping you in subie country.

The problem with taking out a personal loan to payoff the car then sell it is that he still needs to take out another loan to buy another car. He will also have little to no down payment for the new purchase, so he will probably be upside down on that loan from day one. He will end up with 2 loans, the personal loan will most likely charge much higher interest rate as well. I don't think he will be better off in this scenario. Again, IMHO smartest thing is just to keep with the LGT and cut other expenses.

 

Point taken, but what I meant to include was this:

 

He already owes $18,400, but his payments reflect something much higher (meaning higher payments obviously)

 

If he took out a loan for $18,400, his payments would then reflect the loan amount.

 

At that point, he could sell his car privately for say... $15,000 and KEEP the $18,400 loan.

 

With $15,000 in hand, go buy another car and continue to make payments on the lower monthly payment loan.

 

If all that is needing to be lowered is a monthly payment, Gilster, then pull a loan for the car and pay it off. Just make payments on the loan instead of the LGT.

 

Make sense?

the personal loan will most likely charge much higher interest rate

 

Yes, BUT if the payments are lower and are at or below the same payment term, the interest rate matters not.

 

Payments on a $28,000 loan at 5% will be more expensive than an $18,000 loan at 15%.

I guess Ill hang onto it, and if I come across some free cash, I can use that to pay down the loan significantly, then maybe if my car is still worth anything I could come out on top.

 

 

thats the only way to do it...use your tax refund and dump it into the car but tell the bank when u cut them the check to apply it to the principal, NOT the interest

I could probably scrounge together $7k when my employee stock options come around at the end of the month.

 

I was going to use $5k of that to pay off an outstanding credit card. Which is killing me.

 

Lets say I paid off enough as to where I owe'd only $10k in principle on the car (Ill deal with the credit card in some other way). Then what is the best option ?

Point taken, but what I meant to include was this:

 

He already owes $18,400, but his payments reflect something much higher (meaning higher payments obviously)

 

If he took out a loan for $18,400, his payments would then reflect the loan amount.

 

At that point, he could sell his car privately for say... $15,000 and KEEP the $18,400 loan.

 

With $15,000 in hand, go buy another car and continue to make payments on the lower monthly payment loan.

 

If all that is needing to be lowered is a monthly payment, Gilster, then pull a loan for the car and pay it off. Just make payments on the loan instead of the LGT.

 

Make sense?

 

Actually it's not going to work. Using USAA, since that's the bank you pointed out. A personal loan is 11.25% APR for 48 months. 60 months is the max term but the website doesn't say what the interest rate is.

 

https://www.usaa.com/inet/ent_utils/McStaticPages?key=bank_loan_personal

 

Anyway, $18,400 at 11.25% for 48 months has monthly payment of $477.79! USAA's term is actually not that good, so we will take a look at PenFed's (my bank) terms.

 

https://www.penfed.org/productsAndRates/loans/personalLoans/personalLoans.asp

 

For the max length 60 month loan the APR is 9.99%. So that will give you the monthly payment of $390.86. Still higher than his current payment.

Oh shit, my bad! I thought he said $567 a month!

 

USAA displays that high of a rate as default?

 

All the loans I've pulled through them have been at or below 7.5% ... Hmm. Oh well.

 

EDIT: I would just keep your car, Git. Don't go through all of this hassle if you're not even going to really come out on top after all of this. If you've got $7k coming along soon, pay off your credit card, and use the remainder to put down on the principle on the car. When money comes around, keep putting down those principle payments until you pay it off.

You are better off keeping the car until the wheels fall off and finding other ways in your daily life to lower your cost. Use that 7 grand your talking about and pay off that credit card. There has to be a way to knock 60 dollars or more out of your monthly costs. Try getting rid of cable or spending less on food, or entertainment. You really need to get rid of these debts fast.

What if you sold it and got a cheaper Impreza. Dont want mess around with credit card debt.

Why is your car loan climbing? It should not climb. Interest is outlined as soon as you sign your finance contract, and it spells out how much interest you will pay for the duration of the debt. It is not revolving credit!

 

Just sell the car for the amount owed and spend some money on a used car.

 

From your numbers 367*72+9,000=35,424. Let say the car out the door was 29.5K all said and done, you are paying like 6K in interest for the life of the loan.

 

Anyway, you can either just keep the car and enjoy+suffer, but he mileage is pretty high. I think best bet is to cut your loses and sell it outright for amount owed. You can surely find someone to buy it for that amount with all mods. Then you can either get yourself in a cheaper car, make it used, but financing on a used car is usually a lot higher.

 

If you really feel too down with this deal, just cut your loses, sell it privately, and get yourself into something you will feel better. I did the same about a year ago and I am happy with my current setup.

 

GL

 

X

What if you sold it and got a cheaper Impreza. Dont want mess around with credit card debt.

 

:lol:

 

That was part of my plan, did you read any of this ?!?!?

This is all great advice thanks guys, a lot.

 

My credit cards have been my main concern, college killed them. I want to get them down to zero, but I was also thinking getting a cheaper ride was a good idea too.

 

Wishful thinking a little too late.