negative equity and high interest rates

MollyGroove · #1 08-25-2009, 11:06 PM

my fiancee and I are trying to get out of our car because it has a high interest rate (we've had it for just over a year now). We've tried re-financing, and although we have good credit, we were told we didn't have enough established credit. I'm not really sure how much more established we are supposed to be because we haven't missed payments on anything, we have credit cards that are used and quickly paid off. All our bills have been kept up to date (ok, we've been late a couple of times on the odd bill - but this is the extremely rare case). We were looking at trying to trade it in for something with a much lower interest rate. We found a car we liked, worked some numbers with the finance guy from the dealership, and we do qualify for a much lower interest rate. The cost of this new car with the low interest, plus the negative equity from the car we have now, over the same payment period would equal what we are paying now already (only this new car is a lot nicer and has more value than our current car. And we really hate our current car. Not just for the high interest rate.). We were told that the bank would have approved us except for the negative equity. I'm not sure I really understand why as what our current car is going to cost us in the long run due to high interest and what this new car plus the negative equity would cost us is still the exact same amount! We aren't sure what to do at this point. Any suggestions? A co-signer is not an option for us and we really do not want to keep driving this car.

MollyGroove · #2 08-25-2009, 11:09 PM

hmmm... I think I may have placed this in the wrong forum. My apologies.

trent · #3 08-27-2009, 03:07 PM

First find out exactly what you owe on the car. If you financed the car, then what you owe is total outstanding debt before you can get a clear title. If you are leasing the calculation is a bit more complex as you need to take into account the remaining lease payments, the residual car value, and any early termination penalties.

Then you need to find out what is your car worth, by using one of the many free sites like Kelly Blue Book for example.

The last thing you can do is research car manufacturer rebates and find a car (hopefully the one you like) offered with a rebate that offsets the negative equity.

Tawnie Carey · #4 08-28-2009, 11:17 AM

you can't refinance a car - you might be able to trade it in but they will add your negative equity to the balance of the new car loan - but if your credit is that bad - you might just be stuck with the car until its paid off

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Canadian · #5 08-28-2009, 03:02 PM

I would simply wait a pay off the current car, if I were you. You don't have many options with negative equity.

Jason · #6 08-31-2009, 02:49 PM

Can't you just trade-in the car and payoff the negative equity? All this will be offset later by the loan-interest loan for the new car.

MollyGroove · #7 08-31-2009, 11:51 PM

Thanks for the replies guys. We did manage to actually get the car... but only because the dealership pulled some hard core strings. The banks are dumb. Does this make sense to any of you?: We owed $18 500 on our car. The dealership would have bought it wholesale at $7000. Making the negative equity $11 500. The car we were looking at was $20 000. Which means we needed a $31 500 loan. The bank only approved us for $29 000. However, since the car we wanted was only $20 000, they would have approved us if we kept the car we had AND got this one. There's no way we could afford two car loans. The dealership instead gave us $9500 for our old car so we could qualify for the loan. We are very happy and pleased with the dealership... but kind of confused with the banks. I don't understand why they would approve us for 2 car loans which added together was far more than one car loan, plus the negative equity.

Oh, and the payments for the new car (which is also a nicer, more expensive car then our old one), plus the negative equity from the old car is actually costing us less than had we stayed with the old car. I also don't understand why they wouldn't re-finance the car for us since the loan they approved us for getting a car was $10 000 more than what we owed on the old car. I don't understand banks at all.

(Just so no one is confused because I have another post on here about Bell screwing up my credit - I did not apply for the car loan. My fiance did. His credit is very good.)

Fendredly · #8 11-27-2009, 07:03 AM

If I am a limited partner in a hotel, can I make management and Financial decisions or not. If not, why?

Rickson9 · #9 11-27-2009, 02:15 PM

Quote:

Originally Posted by Fendredly

If I am a limited partner in a hotel, can I make management and Financial decisions or not. If not, why?

Depends on what the contract says with regards to your status as a limited partner.

dabene · #10 12-04-2009, 09:44 AM

Quote:

Originally Posted by Fendredly

If I am a limited partner in a hotel, can I make management and Financial decisions or not. If not, why?

This question is easily answered just by finding out your status as in what type of limited partner you are, as others have said its best to have a look at the contract and see if that gives you clues

Hope this helps