'2nd degree' I believe. Just kidding. Free bump!

 

I'm planning on trading in my 07 Toyota Tacoma Prerunner regular cab for the redisigned Z when it comes out. I bought my truck in January and payed a little more than $28,000(I don't remember the exact number) with the 100,000 mile warranty. My APR was 17%, was it because this was my first vehicle purchase and had little credit history established(20 yrs old)? When I go trade in my truck, and lets say they offer me $14,000 for my truck. But I still owe $20,000, what happens to the other $6000 I owe? Do they add it to my new car purchase? What other advise would you give me on my decision? Thanks in advance.

 

So lets say you buy a new Z for $30000, OTD ($27000 for teh car + $3000 TTL). Then you roll another $6000 into the loan. As soon as you drive out the door, it becomes a used car, worth about $24000. Now youi owe $36000 on a $24000 asset.

See any problem there?

bill

 

From what you said, you made a really bad financial decision originally. 17% APR is a killer. That is so ridiculously high that I can't imagine anybody would do that but you did which is why I said that you made a poor financial decision. You end up pay A LOT of money just to make the bank feel better about borrowing you money. I am not sure how limited your credit history has to be to justify that high of a rate. I am pretty sure you can get a personal loan with no assets to back it up for lower rate than that.

Anyways, what's done is done. You can't change what you did than. However, if you're going to trade that truck in now, you'll follow up one bad financial decision with another. That truck takes a huge value hit immediately after you drive it off the lot. If you end up changing your mind and you want to unload it within a year of owning it, you will loose lots of money on it. As time goes on and you pay off some portion of it, the value of the truck and the amount owed will start to come close to each other although that is dependant on the brand of the car. I know this isn't something you probably want to hear but you should hold onto your truck for some time, eliminate some of the debt and consider buying something else once the numbers make more sense. You'll probably get a more favorable rate then too which will help you as well.
If you are not willing to wait, you will loose lots of money and you also may have a hard time financing the next car since you'd have to borrow a lot more than the asset is worth because of the extra debt you'd be rolling in from the previous car. Many banks may not be so happy about that since it's considerable risk to them.

The numbers you quoted on the value of the truck don't seem to add up. You bought it for 28K but within a year the dealer is willing to pay you only 50% of it's original price, and this is a Toyota? Either you overpaid originally, the dealer low balled you big time or both. What's the actual value of this truck as listed on nada.com?

 

Exactly. Let them lowball you. At the last second . . say . . ' " Oh, I will just keep my trade in car, i'll sell it myself " . If it will make you more money to sell your current car . . take the time to sell it yourself. If you can even get $3000 you are ahead by $1000 from what they would do for you.

 

I have a degree in psych
But you don't even need a GED or highschool diploma. IF you have talent and a heartbeat . . they will take you.

 

YES!!!!!!! Thay will add it to the new car. That is if they can even add that to the car without being over 130% of the sticker price. Banks, and only a few of them, will give you a loan for more than the MSRP +tax.
Advice . . . . REFINANCE YOUR CURRENT CAR!!!!!! 17% is an **** assault!!!!! They got you 14% and pulled 3 points. That is okay though, Now that you have several months good payment history . . . call a few banks and have someone refinance your current truck. Toyotas are strong and will last. In a couple years you will be in a good position . . then you can sell your truck and get whatever you want.

 

^^^ what he said, but with a ( !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!) on the end

Thank you bill!!! You think smart about car purchases. I appreciate that

 

Yeah I knew 17% was high, but I went to the dealership knowing the APR was going to be high because I pretty much had no credit history. I think my credit score at the time was roughly 550. The last time I checked my score it was about 643 (wich should be a little better by now), what kind of APR should I expect with these numbers when I refinance?

How long should I wait to refinance my truck? I've heard you have to wait atleast a year to refinance, is this true? I also don't completly understand how refinancing works, can you please explain? Wich banks/credit unions would you suggest? Do you have to have an account with that bank/credit union to refinance with them?

I'm also planning on trading in my truck in about a year and a half, not right now. I'm also paying a little more then I have to on my monthly payments, does this help?

The numbers I gave about the truck were not completly accurate but the APR is right. I will post the accurate numbers tommorow.

Sheesh, I didn't think I would have so many questions :/ ........ sorry about that.

 

at that interest rate I am not sure you are going to be even (owe as much as its worth) on the truck you have now in 18 months. Even refinancing may not help.

You know you are going to buy a new car in 18 months. You need to either a) pay extra payments or b) save some cash before you walk into the dealer for your new Z.

You are on the path to never having a paid off Auto if you aren't careful.

 

You can refinance any time.
Hopefully you owe less than the retail book value.
Refinance through your own bank, ANY credit union, Capitol one is even pretty good. Just start calling banks TODAY!!!! With a credit score over 600 you should be able to get WELL below 10%.

 

Yeah I'm gonna start checking into it. I appreciate all the help you guys gave me.