What is the best type of car to buy if having to roll over negative equity?

Question

I have a 2004 Mitsubishi Endeavour. Great vehicle, just sucks on gas and only take premium. It is worth any where from 8k-12k. I most likely would be rolling over any where from 4k-6k into another vehicle. My financing only allows 120% of the used or msrp value. What would be a good vehicle to look at that might swallow that negative equity and be worth it. Or is it better to try and buy new and find some rebate? I am not wanting to go over 21-22k. Is this too much to ask for?

Any help would be great. No smartass comments please.

Answer 1

In my opinion you should wait until August or September when the 09 Models come out, and they are offering big incentives to get rid of the "left overs".  With rebates and some companies having 0% financing, there might be a way out.  Also with a new car, you are not getting a vehicle with miles on it which in the long run might make that extra note balance more bareable.  Good Luck.

Answer 2

Honestly? There is no car around that range that will swallow that much negative equity (I'm basing this on your figures, and not what a dealer might realistically give you... as they are giving next to nothing right now for SUVs).

If $21-22K is your stopping point, then you need to find a car that's around $14-15K (again, this is all in theory). That $6K in negative equity brings you up to your target, BUT... now you have to go in and ask a bank to overallow way too much money. And, right now, most of them will not do so.

If you really like the Endeavour, my advice is to keep it and ride out the gas prices. Think if it this way -- how much gas would you need to "save" in order to equate $6K? Plus, rolling over all of that negative equity only buries you deeper financially into another vehicle.

Trying to trade into a lesser vehicle when you have negative equity is difficult. Most inexpensive cars will not have rebates large enough to make a dent in the negative equity, and the only ones that will right now are trucks, SUVs, and very expensive vehicles (all of the ones you're probably wanting to avoid, right?). To add, the incentive is then used to swallow your negative equity, when it is usually used to lower the price of the vehicle.

You're in the same boat as hundreds of thousands of Americans right now. Don't panic and trade, as you'll lose thousands up front.

Answer 3

I totally agree with ElGrande. Let me ask you this, have you considered keeping you Endeavor and possibly getting a pre-owned (I hate the word "used") vehicle? I only ask because I am actually considering it. I love my Jeep, it's roomy, I can fit my three kids in the second row (2 carseats!) and in the back with the third row down I can carry a TON of cargo. It's hard to part with. But I drive a lot alone, to and from work, plus during lunch, the grocery store and such, I am considering the option of getting a small car to use during these times, preowned, I constantly check out the CarMax website because no one I know that has purchased from there has had one complaint. Whatever you decide, think it through thouroughly, and consider all options. You'll be kicking yourself in the a$$ if you jump too soon!

Good Luck!!

Answer 4

Something that holds it's value like an Accord or something would be good. I'd try to make some extra payments to knock down how much you owe on the Endeavour. The extra money you spend to take care of the negative equity will probably cost you more than you're saving in gas(4-6K = about $200-300 per month extra).

Also don't worry so much about the premium. It's only like $4 more or so than regular. If you're spending $56 on your tank with regular is $60 so ridiculous?