Tips on Buying Cars: negative equity, lower monthly payments, negative equity

Question
QUESTION: I purchased a 2005 Toyota Sienna in 2006. Its a top of the line van but went into it with about 6000.00 from the trade in of a Toyota Tacoma. Hind sight says I should have kept the Tacoma but a lesson learned. I owe about 24000.00 on the van and ive been making payments of 535.00 per month for 22 months. I'm in it pretty deep. We are in the need of a second vehicle and I was wondering if trading the vehicle for two cheaper ones would be advised? i was thinking that I could split the negative equity between them. What do you advise??

ANSWER: Hi Diana

Trading down for two vehicles is not going to happen, your to far up-side down for a lender to consider unless you come up with a fair amount of cash and besides should it happen you will be in a much deeper hole than you are at present.

2 options, keep the Sienna , buy another vehicle and roll the payments into one, I dont know the term but having made 22 payments you may be able to re-finance both cars over a longer term which means lower monthly payments combined for both cars.

your only other option is buying a second inexpensive vehicle for cash that will take care of your needs, or with good credit , yes some lenders will let you carry 2 loans.

SUMMARY... without going into a long explanation , trading down for 2 vehicles in your situation most likely is not possible and if it is, it will hurt your wallet big time.

  Ray

PS.. Go to my website   http://www.usedcartips.org/  pick up some pointers how to buy a car and should you have questions feel free to make contact through my email address provided


---------- FOLLOW-UP ----------

QUESTION: yes one more question pleaas. it is wise to try to pay extra on a vehicle in order to pay it off early or is it better to put that money in a acct drawing more interest than i am paying for the vehicle??

Answer
Diana, there is no question here, that paying off early is the way to go when you compare the interest rates what you get to compared to what you pay.

The problem here is most lenders don't allow extra payments to go against the current interest rate, which means you will be paying full interest till the total amount is paid, save up any extra funds in an account till such time you can pay out loan

 Ray