I bought a 2016 Acura during the pandemic lockdown after my car died on me. Picked up a TLX with 40k for 32k at CarMax. Totally got hosed on the price, but I needed a car. I got a great interest loan, but my payments are 545 a month.
I got 25,700 left in the loan. The car is worth 17,325. You can see that 10k premium they charged… can’t you?
I’m sick of paying $545 a month. I don’t need an Acura… I’d be perfectly happy with an accord, camery, or wrx.
If I go back to CarMax will they work with me to trade in for a cheaper car and lower my payment?
I feel like I got screwed with that 10k premium they priced in on my Acura… I figure I’m going to eat it regardless… but can’t I eat it at $320 month versus 540 and just drive something less flashy?
Only Carmax can answer that question. If you are home owner you might look into a Home Equity Loan . Not really a wise thing to do but you are so upside down that any trade you do will be costly.
It’s generally a bad idea to trade in a car that you’re underwater on. The problem here is that you might get a lower payment on an older/cheaper car, but you’re still on the hook on the difference you owe, that’s not going away, so while your payment might be lower, you’re likely going to be extending the term out even longer, which might end up costing you more overall than it would be if you just kept your current car.
My advice would be to keep the Acura until you’re got some positive equity in it then weigh your options.
ANY car dealer will be willing to “work with you” to lower your payment. Problem is, that lower payment plus the $8K you still owe means those payments will go on for a lot longer time. So one bad decision is compounded into a second one. I’d advise against it.
Trade with negative equity and take a beating on the interest rate or you can suck it up and pay off the loan you have now. Maybe by taking part time job or cutting something back.
Why is that? Sell it now, and the money from the sale goes to pay for most of the car. Wait until later, and you pay for a lot more of the car, since you don’t have the help of a large amount of money from the sale.
Sell now for $17325 and you have to pay $8375 (in monthly payments) + $4000 for a decent used car. Then $2000 in repairs over the next 5 years that the newer car wouldn’t need. Less if you don’t drive much.
Sell it 5 years from now and you’ll get maybe $8,000 for it. That’s $9325 less than you could get now. So you’re paying $9325 to keep this car for 5 more years when you could spend $4000 + $2000 on a different car. Is paying $3325 worth it to have this Acura instead of the $4000 used car?
You over paid for the car. You want to come back later and ask for an adjustment? I don’t think that’s how it works. You can refinance to have a lower interest rate if interest rates have gone down.
To make the most of your money, you want to have the shortest loan period possible and pay the maximum payment. It hurts now but it will free you later.
The $540 is for the car loan, not the car. Switching the car won’t change the car loan. I bet rates have gone up, so a new car loan for that amount will cost more, for the same payout period. I’d read the loan, figure out if there are any prepayment penalties. If there aren’t, I’d either pay more per month to end the loan quicker or keep up the payments while saving additional money to pay it all off once you have enough saved. If all this works with the loan terms, of course.
You can go talk it over with carmax, but be VERY careful, don’t agree to anything unless you understand it inside and out, and have slept on it a few days.
You didn’t ask about this, but I have to question the decision to take a used car loan that won’t be paid off until the car is eleven years old. That gives you little opportunity to get ahead of the game and put some money away for your next car and get out of the cycle of financing. Regardless of the price you paid (or overpaid), my opinion is that you couldn’t afford this car from the start.
If i were the manager of the carmax you deal with, I’d be happy to buy back your car as long as you paid me $8,400 for your negative equity. What would my incentive be to do anything else?
Here’s the deal. Tough it out and pay it off. It looks like you did a five or six year plan. So the car will be worn out by then and you can buy anything you want.
Two stories on the same car. I needed a car and it was 1981 and interest rates were nuts. The bank rate was 18% but that was the best anyone could do. Two years later the rate had come down so I talked to the bank to refinance it. They said sure but due to the rule of 78ths, I had been paying mainly interest for two years and the principle was still pretty high. So I declined. I had paid $10,000 for that car but stopped at the dealer to consider a trade. A two year old olds ways now worth about $2500 in trade. So I got mad and finally junked it 20 years later with 480,000 miles.
I’ll just add that I bought another car in 86 and while the price had gone up to $18,000, the Gm interest rate was down to 7.5%. The payment was about the same. I still kept the olds though. In times like these, it is time to hang on and try to not owe more than you have to. This is not the first time the economy has gone nuts.
Have you see what $4k buys you these days? With the price difference only being around $700 at the end (using your math), Yeah, I’d hold onto the 2016 Acura rather than roll the dice with a 15+ year old Impala or 2005 Camry with 190k on the clock (that’s what $4k gets you these days.)
Anyway I just suggested holding onto the Acura until he has a positive equity in it. At that point you sell it for what’s worth and move on to cheaper car. Preferably you pay for the cheaper car in cash.
That 8375.00 will have to be paid at the same time as the vehicle is sold to have the lien released . That plus 4000.00 for a worn out used vehicle which it appears he may not have in savings . That means 12000.00 in a personal loan with high interest so not much of a relief at all.
Yes, they did charge more. But here’s the thing about used car prices…they only go as high as people are willing to pay. Used car prices are very market driven. When the supply goes down, the price goes up. Carmax didn’t do anything specifically to you that you wouldn’t have done to anyone else.
Lowering your payment and lowering the amount you owe are two very different things, and often at odds with each other. Specifically which one are you after?
$14,675 in depreciation on a used Acura over a 2-to-3-year period, perhaps that is more depreciation than expected. I wonder what the repair cost would have been for the previous vehicle?
Another vote for keeping the car that you have. Perhaps you can refinance at a longer term if the monthly payment is burdensome. However, the savings are likely to be small, because interest rates are much higher today than they were in 2020/2021.
What is the payoff right now, the total price includes interest for the entire time of the payments or what’s left on the loan, at 1st you are paying more interest then the principal amount… Your payoff should be lower then the total amount owed, unless there is an early payoff penalty…
So if your payoff amount is even less then the amount left to pay (depending on how much) then you might look at taking out a personal loan (or as Volvo said Home Equity Loan) for the difference owed on the vehicle and then look for something more affordable… If the 2 combined payments are lower and not longer then what you are paying now then go for it (one car loan and one personal loan to pay the difference of what is owed vs what you can sell it for), if higher then you are probably stuck…
Something else to consider is your Ins rate, if a cheaper vehicle Ins would be cheaper then what you are paying currently then you could apply that amount to your loan payment to help offset the difference…
If you have paid 30 payments on a 60 payment plan and you decide to pay it off at 30 payments or half the time then your payoff will be less (total amount paid) vs the total amount you will pay for 60 payments due to not having to pay the remaining interest… I have done it multiple times…
I don’t don’t know if it is a state by state thing or???
Kinda like paying off your home in 15-20 years on a 30 year loan, you save on the interest…
What happens if you drive it to Carmax, take the plates off, give them the keys, and default on the loan? Apparently you paid one and a half times what the car was worth at the time. Car prices hadn’t gone up yet during the lockdown. It wasn’t until 2021 when the lockdown was over and masking was going away.