When you owe more on a car that it's actually worth, can you trade it in for a substantially cheaper car?

Question

For instance, I have a 2006 Isuzu Ascender. I owe about $21,000 on it but it's probably worth $14,000 or $15,000, which means I have about $6,000 or $7,000 in negative equity. If I go out and purchase a cheaper car, something that is like $12,000, won't that help the situation?

Answer 1

If you have Perfect Credit, i mean PERFECT.

Answer 2

No, as hardly any bank would overallow that much negative equity on a new loan. Even if they would allow it, you're right back where you started... owing way too much on a different vehicle.

It is VERY hard to "trade down" to a cheaper car when you have a large amount of negative equity.

Answer 3

No, it won't. You would then owe $19,000 for a car you just bought that is now worth $9,000. Rolling negative equity onto another car is always a bad idea and never helps.

Answer 4

You're not likely to get fiananced (with all that negative equity).Like the post above said If you have really,really strong credit,you might could pull it off but I doubt you do or you probably would be in the shape you're in (no offense).One more thing to consider though...right now you are "burried" in a fairly nice vehicle.Do you really want to be "burried" in "a substantially cheaper car"?

Answer 5

No. You have to bite the bullet and pay off the debt at some point. The more times you refinance, the deeper in the hole ur gonna go. As a car dealer, I know that I can refinance you, if ur credit is ok. However, the plain truth is the more times you refinance the more negative equity ur gonna have. Beware, there are plenty of dealers out there that will refinance you, but no matter what they tell you, ur gonna end up owing even more money on a car that is worth far less.