QuestionQUESTION: Hello,
Here is my current situation:
I am a college student and my current car is a 2008 Honda S2000 with 8,500 miles and owe about 25k(bought used). It is under my name and co-signed by my father. At this moment in time I cannot afford the payments and I am wanting to trade in for something a lot cheaper and more practical. But, I am afraid of the negative equity and how much I'll end up spending in the long-run if I do trade in. We also have a paid-off 2002 Lexus ES300 with high mileage (140k) that we want to use as a 2nd trade in (down payment). I was wondering what the best solution is.
1).Should I sell the S2000 and pay for the remaining balance? There is one problem, I was involved in an accident and there was about $6,000 in damages (rear suspension parts were damaged, and I believe axle was replaced). I know that even though the car was repaired with new OEM parts, it will still take a significant hit. 2).Keep the S2000 and sell the high mileage Lexus (which was also involved in I believe 2 accidents)? 3).Or trade in both and get a used Honda Civic sedan?
Reason I do not want to drive the Lexus is because of mechanical problems and most importantly bad gas mileage. But if my situation is leaning towards selling the S2k and driving the Lexus, I will.
Also, if the best solution is to sell, where should I sell it? Is Carmax or the dealerships a good place? I'm sure the answer is no, but I just don't want to deal with the private selling hassles: low-ballers, time consumption, and waiting for months. If I do end up selling privately, how can I maximize the price even though the cars have been involved in wrecks? How can I get the maximum amount of money out of these cars?
Any help would be greatly appreciated.
Thank you,
David P.
ANSWER: David:Thanks for those concerns.To begin with,you have not had the Honda very long to have any equity.The solution is to keep it,or perhaps have someone "assume' the loan.To give up the car(don't make payments) can ruin your credit and your Dads.Also anytime you try to sell a car without any equity,the value of the car will be less than you think.Another suggestion is to find another car with a good rebate,because the banks can only carry so much negative equity.(meaning you are up-side down)The only way to get out,MONEY DOWN.This may sound cruel,but you bought this car knowing on how much the car was,and payments.Good luck!
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QUESTION: thanks for your response. i am going try and refinance and get a much lower interest rate. how likely are banks going to loan money to a college student with a part time job making roughly 1,500--2k/month?
thanks once again,
david
AnswerDavid:With current rates,you may be able to get lower payment.Also consider on line banking(i.e.Capital One or credit unions)Remember,the amount to re-finance is normally 75% of loan value.Again down might be needed.And your credit has lot to with getting a loan.(along with job history,income,ect.)From my experience,part time employment could be difficult in getting a loan.A co-signer might be helpful.Good luck!
