Financing, what can be done?

[rondocap]

OK, so in August of last year I traded in a 2006 Hummer H3 that was leased, and financed a 2008 H3 new. Total price was around $44,000, but I got 0% interest.

Now, the amount owed is still around $38,000 and some change. I'd like to switch to a cheaper monthly payment and lower gas since the last year the economy took a sharp downturn.

I know that I will have that negative equity if I decide to do this, so what's the best way to go about it?

My monthly payment right now is $614. The Hummer has 11,000 miles on it and is still in great condition - I've been told the trade-in value is somewhere between 23,000 to 27,000 thousand. So that means I have 11,000 left best case to deal with.

So...I guess the only thing that would work is if I bought like a $15,000 car used, and it'd be $26,000+ that I'd have to deal with, but at least it would be a lower monthly payment and better on gas.

Is there another way? Or is that pretty much the only way out of it?

[HummerMann]

Never trade a new vehicle in the first 18 months unless you have money to burn! If you must get rid of it sell it outright and don't take the trade in price for it. For what you are going to loose in equity you can probably buy 4,000 gallons of gas if you dump it now.

[rondocap]

So even if it's a financed vehicle, I can still sell it on the regular market? And then obviously I'd still have to pay off whatever I owe to GMAC.

So how would that work? Can you transfer the title?

[phantom2]

If you are selling it privately,you have to first payoff the vehicle, and then the lender will then send you the title.

[Yarjammer]

I just played the negative equity game when I picked up my H3 (06 w/ 12K miles for $18K from the dealer). You are going to have a very very hard time rolling $26K of negative equity into a car that isn't worth half that. It's a percentage game (something like 105% market value of vehicle purchased = max principle loan for vehicle + negative equity).

Have you talked to your bank about refinancing your auto loan? I have done it in the past and it saved me ~$100/ month and shortened the term.

The other option is finding someone to assume your loan...

[rondocap]

I got 0% financing ...so I am not sure if it's really worth it to refinance. I would only need to roll like 10-12k into whatever car I'd get, would that be a little more possible?

Well, are there places were people look for loans to assume? I am sure you would need to give them an inventive in order for them to want to take it over a new car, right? Any ideas on this?

[Yarjammer]

Good point about the 0%, I didn't take that into account.

Craigslist is one place to start or network with any friends or family who may secretly be pining for an H3. You are most likely best off talking to your preferred bank or credit union about what options exist (amount of negative equity you can roll in and still qualify for a good rate on the next loan).

[timgco]

The best thing you could do is hang onto it at this point...unless you are looking at some serious money issues. 11K of negative equity will be very hard to roll into another used vehicle.

1st, call some local dealers and get a buy bid on your truck. See what they'll give you for a straight buy out on it for a 10 day and 30 day buy. Most will only do it for 3 days or a week. Just tell them you already have another truck and considering selling it. Don;t tell them what you owe or that you need to ditch it. They will hammer you even more on price. Start with the HUMMER dealers 1st. This will give you a better idea of what the real world numbers in your area are for this truck. Check their lot fo rused HUMMERS and their value as well. If you have an ALpha, you can consider it worth a little more than the I5, but it should be loaded. I'm talking about 4K diference at best.

Next list your truck up on craigslist and autotrader. Shoot for 2K more than your buy bid and let it roll for 30 days. See what offers you get.
If nothing, resort back to the buy bids and get an updated price. You'll be able to go to any dealer to get your trade and show them the buy bid through the other dealer. Do this, and you can get your tax credit to the next vehicle. Sinc eyou're going for a cheaper vehicle, you will have not tax applied to the next truck. That should save you a grand or two.

Go find your next vehicle. OR see if xyz dealer can find you something from the auction to get you into. That will make it easier to roll that 11K in. If you're trying to ditch this truck and roll the 11K, your credit score better be in teh mid 700's or higher. If not, you're going to have a tough time getting out of it....esp. sinc eyou mentioned used.

You may look into a new car that has some serious incentives as well to eat up some of the negative equity.

I understand you want a cheaper payment AND better fuel economy for a lesser out of pockert monthly fuel bill. If you consider how much money you will roll into the next truck (if you can get a loan with that much negative equity), you can buy a ton of gas for what you will loose.

The one thing you do have going for you is that zero percent. You can pay that truck down over the next year. you already took teh biggest hit on the depreciation value. It will start to slow some now...unless this auto market takes a deeper dive.....than hang on.