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msfdisk

Payoff current upside down loan or sell on own?

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I will be selling my house and buying another home within the next few months.
I have quite a bit of equity and one of the things I want to pay off is my auto loan.

  • $37,500 balance
  • @13% interest (a last min, weekend, stupid decision, traded in another Tahoe that only had 3.3%)
  • 54 months left (2015 Tahoe with 80k miles.)
  • I drive about 20k a year
  • Payment is $933/mo

 

The car was recently valued at $22,500 Fair price at a dealer.  Private Party is a bit higher at around $25-26k.  

My question is if I have a pool of $38,000 that I'm going to use so I no longer have a car payment: 

  1. Should I sell it private party (to get more money) and pay the difference then pay cash for a new vehicle?
    1. Sell PP for $26,000.  I pay $11,500 to pay off the lein then use the remainder $26,500 for a new vehicle.
  2. Should I trade it in and purchase a new car from a dealer and simply put $38k down which will include rollover payoff?
  3. Should I sell it private party, pay the difference but buy a $20k vehicle
    1. Sell PP for $26k, pay $11,500 to pay lein and ONLY buy a $20k vehicle
    2. Keep $6,500
  4. Pay off the loan and keep the vehicle?

 

 

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12 hours ago, MarvBear said:

#4

MarvBear, what is your reasoning?  That was my first instinct as well, but I am curious as to the professional opinion.
Thanks

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Well if you pay it off now, you stop all the interest from accumulating.   You will have only paid the interest up to the date of the payoff.  

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I agree with #4.  You know what you have in your current vehicle, you know how it has been maintained and driven.  Now if it has not been maintained and/or its been abused unload it and go with #3.

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I purchased it when it had 27k miles.  It was a corp. lease and had a front end accident at 1,100 miles. (air bag deployed)

other than that, there is an ongoing issue that the dealer cannot seem to find....

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So you will not be using the equity towards your new house? 

 

What is the ongoing issue?

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26 minutes ago, Glacier said:

So you will not be using the equity towards your new house? 

 

What is the ongoing issue?

I will have plenty to pay off other loans and another vehicle and have a down payment.  My question is specific to the upside down vehicle.

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6 hours ago, tomforr said:

I agree with #4.  You know what you have in your current vehicle, you know how it has been maintained and driven.  Now if it has not been maintained and/or its been abused unload it and go with #3.

I would purchase a brand new vehicle with the left over money.  A local dealership has Terrains and Acadias priced under $30k AWD.  Not the same class as the Tahoe by any means.... but brand new

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On 1/29/2019 at 8:04 PM, msfdisk said:

I will be selling my house and buying another home within the next few months.
I have quite a bit of equity and one of the things I want to pay off is my auto loan.

  • $37,500 balance
  • @13% interest (a last min, weekend, stupid decision, traded in another Tahoe that only had 3.3%)
  • 54 months left (2015 Tahoe with 80k miles.)
  • I drive about 20k a year
  • Payment is $933/mo

 

The car was recently valued at $22,500 Fair price at a dealer.  Private Party is a bit higher at around $25-26k.  

My question is if I have a pool of $38,000 that I'm going to use so I no longer have a car payment: 

  1. Should I sell it private party (to get more money) and pay the difference then pay cash for a new vehicle?
    1. Sell PP for $26,000.  I pay $11,500 to pay off the lein then use the remainder $26,500 for a new vehicle.
  2. Should I trade it in and purchase a new car from a dealer and simply put $38k down which will include rollover payoff?
  3. Should I sell it private party, pay the difference but buy a $20k vehicle
    1. Sell PP for $26k, pay $11,500 to pay lein and ONLY buy a $20k vehicle
    2. Keep $6,500
  4. Pay off the loan and keep the vehicle?

 

 

It depends what your goals are, but unless you are already wealthy 1 and 2 make 0 sense.  

 

Most likely the cost of 4 is going to be less than the cost of 3.  Do the math, and make sure you account for the total costs of both approaches over 5-10 years and you should have your answer.  

 

Serially trading vehicles is often the second-best way, behind having children, to ensure poverty/dependency on others when you retire.  Eating Meow Mix for dinner when you're 75 isn't glamorous.

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On ‎1‎/‎30‎/‎2019 at 1:05 PM, msfdisk said:

I will have plenty to pay off other loans and another vehicle and have a down payment.  My question is specific to the upside down vehicle.

Then I would go with #4.  Makes most financial sense. 

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On 1/30/2019 at 2:05 PM, msfdisk said:

I will have plenty to pay off other loans and another vehicle and have a down payment.  My question is specific to the upside down vehicle.

What about emergency fund and savings? I say pay off the loan, sell the car private party and buy a 5k car, saving the rest for a rainy day.

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