Keep the Car?

ItsMyMoney · #1 (**permalink**) 11-12-2007, 04:43 PM

Hello everyone,
I need some advice. My wife and I are in the process of paying off our credit card debt. We are applying a fairly large payment every month to the fairly large credit card debt and will be done in 26 months with no hiccups. This leads into my question about cars.

I am making payments on my 2003 Infiniti G35. It has 29,000 miles on it and I still owe $24,200. My payment is $511 a month. Here is where you come in. I would like to trade it in for a cheaper car, say a little reliable car for like $11,000. I will have like $6,000 in negative equity rolled in since I could trade it for around $18,000, but the payments would be significantly cheaper around $340 a month. It would also get 27-30 mpg while I am averaging 19mpg. I could use all the extra money and apply that to the credit card debt. My question is, what would you guys do?

James13242 · #2 (**permalink**) 11-12-2007, 09:51 PM

I would never roll negative equity into another car loan. Doing so will put you upside down again. I would do the best that I could to get the $6k balance differance payed off (along with the card) and buy something dirt cheap (you can get a car for much less than $11k). It may suck to drive a $2500 beater but you can be out of debt much quicker.

Hermes · #3 (**permalink**) 11-13-2007, 06:43 AM

Well, that is an option but you will stay in debt longer then if you would try to, as James suggested, get somehting cheaper until you sort out your financials.

Scale down when it comes to your car as much as possible for the next two years (you said you will have repaid you CC in 26 months and that will free up cash).

After that you can upgrade your ride to something you like and be able to afford.

It makes littles sense to roll over negative equity from one loan into another loan.

ItsMyMoney · #4 (**permalink**) 11-17-2007, 11:13 AM

Hey guys,
Thanks for the advice. I am paying $5,000 on my car to reduce the amount of negative equity I will roll into a new car. I should almost break even. I will also be buying the cheapest thing I can find that is safe and reliable. Wish me luck as I hate car dealers.

brian · #5 (**permalink**) 11-18-2007, 06:38 AM

Don't we all.

Best of luck anyway.

Hermes · #6 (**permalink**) 11-22-2007, 04:34 AM

Good luck!

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