Need some input on a situation…
Currently own a car. It’s valued between $22k and $26k but the loan is around $31k with a 9% APR. For quick math, assuming it’s worth a median of $24k — I’m underwater about $7k. This is for a 72 month loan that started in August of this year with a $600/m payment.
My question is what advice is out there for what I should do next? I’ve heard a lot of different advice… Paying down the principal and trying to find a new car then going from there. Trying to ditch this into a new car with a lower APR.
I’m at a loss and trying to make sense of what the best option for me is.
Make your payments and hope your car doesn’t get totaled. I was in a similar situation because of my job and the miles I drive on my vehicle. I bought a new Toyota Corolla and was underwater for probably 3 of the 5 years on my loan. But I still have the car (8 years old with 240k miles) and no more car payment!
Lease a new car and roll loan balance into the lease payments
1. Keep car, aggressively pay down debt until no longer underwater. Or until car is paid in full. Picking up extra work to pay off this high interest debt is also appropriate. Or…
2. Sell car, pick up a $5k car, then pay down only $12k of debt. The current market is very unique in that you can sell your car for much, much more than you could have years ago. The $5k is still inflated, but not nearly as bad.
I think it’s unlikely you will find better financing unless your credit score shot up above 700 in the last few months.
Are you in a position to pay off the difference and then refinance your current loan? I’d your credit is good credit union like DCU will refinance used cars as low as 1.5-2%.
Good god man. What’s with the massive interest rate?
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