Tips on Buying Cars: Trading down to a lesser expensive car, 2006 nissan altima, nissan altima

Question
Ok so here's the deal:  I leased a 2006 Nissan Altima 2.5 SL in February of 2006. My lease is for 48 mos. I'm halfway through. My payment is $560/month, and I just bought a house, and I can no longer afford this payment. They payoff amount is about $22,000, and its only worth about $14,000!  I've considered trading DOWN to like a Nissan Versa, which is only about $15,000. Does this sound like a good idea? What should I do in this position???  $560/mo will make me go broke, so anything under $400 (or preferably $350/mo) will be so helpful!

Answer
Brian,

Thanks for your question.  Trading down is always a good idea when you are looking to lower your payment.  The problem you are going to have in this situation is you have about $8000 in negative equity based on your numbers.  This poses a problem to the banks that will finance you.  That problem being they are not necessarily going to want to loan you $8000 on top of a Nissan versa.  You would not want to do that either, because in the long run you are just worsening your situation.  You also have to keep in mind that whatever payment you get, about $200 of your next payment will be on the negative equity from the Altima.  The best thing to do is to put some money down to lower that amount of negative equity.  Depending on your credit you can finance about 120 to 140% of the invoice value of your next vehicle.  The cheaper the vehicle, the less you are able to cover up percentage wise.  Got it?  It is sometimes confusing.  You might want to try and sell your vehicle yourself to get more money for it, but understand that you will have to come out of pocket for any amount that you sell the vehicle less than payoff.  I hope this helps you.

Thanks -

Jeremy Beck