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frokey

Refi, Buy New, or Stay Put

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Hey guys! Hoping you can give me a bit of perspective on the following...

 

Back in 2016, I purchased a new Ford Focus out of desperation because my existing vehicle was dying quickly. (It wouldn't even crank again once I got to the lot! lol) My credit at the time was in the 500s, so I got a crappy interest rate of a little over 15% and a monthly payment of $450. Top that off with the fact that a Ford Focus isn't exactly ideal for a big guy who's 6'5, but hey, you do what you gotta to do. 🤷‍♂️

 

Fast forward to today and I'm much better creditwise: FICOs of 650 and 675 on TU and EX (706 if you include FICO 9). Based on KBB and Edmonds, it looks like I'm about $6500-7000 upside down on the loan which matures in September of 2022. In line with the title of this post, I'm considering the following:

 

Refinance - get another loan at a lower rate, but not sure if they'd cover the negative equity. If not, this wouldn't be a viable option for me because I don't have that much cash on hand. 

 

Trade In and Buy New - get a new vehicle at a significantly lower rate and hopefully with some factory/dealer incentives, but would need to roll over the negative equity into that loan. Unfortunately, that would raise my overall loan amount.

 

Stay Put - ride out the current loan until it matures in 2022. My only fear with this is the possibility of some type of transmission issue which is a known problem with this model. I've had some shuddering that I had them fix maybe a year and a half ago, but the problem came back. There's some class action stuff going on, but who knows when that would actually kick in in the event that I had issues. Don't really want to be stuck with a bum vehicle that I'm still paying on.

 

As I said in my opening, I'd really love to get you all's opinions on the matter just to help me process things and make a wise decision moving forward. Thanks!!

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Just the first year of depreciation on a new car will be more than the cost of a transmission in a Ford Focus.

 

 

Edited by cv91915

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First things first...a different vehicle makes sense only if the current vehicle does not meet your needs.  It sounds as though this one does not.

 

Secondly, whether you keep this one or get something else, DO NOT limit yourself to making minimum payments.  One is better served to toss as much as possible each month and this becomes even more a truism when being bent over on the interest rate. 

 

With regard to the transmission, it may be worth looking at the Focus-related forums and see if there is any pattern of AWA that is available if the vehicle is already out of warranty.  With a vehicle that is less that four years in age, however, you SHOULD still have some manner of factory warranty coverage though that still applies to the powertrain. 

 

Lastly...whether you re-fi or get a different vehicle, DO NOT make your pain worse with another six year (or worse) note.  If it cannot be paid off in three or four years, you are buying too much car in most instances.  Don't be one of those people that payment shops.  When they break out the four-box form, you may as well ask if they have some lube available...

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Does the OP know approximately how much more they owe on the vehicle than it is worth?

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Just the first year of depreciation on a new car will be more than the cost of a transmission in a Ford Focus.
 
 

Thanks cv91915! Good to know.


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First things first...a different vehicle makes sense only if the current vehicle does not meet your needs.  It sounds as though this one does not.
 
Secondly, whether you keep this one or get something else, DO NOT limit yourself to making minimum payments.  One is better served to toss as much as possible each month and this becomes even more a truism when being bent over on the interest rate. 
 
With regard to the transmission, it may be worth looking at the Focus-related forums and see if there is any pattern of AWA that is available if the vehicle is already out of warranty.  With a vehicle that is less that four years in age, however, you SHOULD still have some manner of factory warranty coverage though that still applies to the powertrain. 
 
Lastly...whether you re-fi or get a different vehicle, DO NOT make your pain worse with another six year (or worse) note.  If it cannot be paid off in three or four years, you are buying too much car in most instances.  Don't be one of those people that payment shops.  When they break out the four-box form, you may as well ask if they have some lube available...

Thanks for the thoughtful input centex! That’s a good point about paying more than the minimum. On the refi option, I wouldn’t even consider going for a term that’s longer than what I have left on the current loan. It would either be to get “right side up” faster, or to get a slight reduction in my monthly payment. And the lube comment was priceless!


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Does the OP know approximately how much more they owe on the vehicle than it is worth?

Hey MarvBear! The payoff is currently sitting at $12,750 and some change. Looking at valuations online, it seems I’d be averaging around $6,000 as a trade.


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pay fast, drive slow. learn lesson.

 

how many miles on the focus?

 

I would not make another financial decision that leads to a longer term and more negative equity.

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pay fast, drive slow. learn lesson.
 
how many miles on the focus?
 
I would not make another financial decision that leads to a longer term and more negative equity.

Might put that on a poster! Lol
Mileage is approximately 65k. I’m really leaning towards staying put at least until I’ve got some positive equity in the deal.


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21 minutes ago, frokey said:


Mileage is approximately 65k. I’m really leaning towards staying put at least until I’ve got some positive equity in the deal.
 

Imagine how much better life would be without ANY car payments (people actually do this!).

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I'll be blunt.    I've always said, pay fast drive slow.  I would stay put.  With only 65K on the odometer you should have some powertrain warranty left, although I am not very familiar with the Ford warranty as it applies to a new vehicle.

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I'll be blunt.    I've always said, pay fast drive slow.  I would stay put.  With only 65K on the odometer you should have some powertrain warranty left, although I am not very familiar with the Ford warranty as it applies to a new vehicle.

Powertrain warranty was 60K, but it seems like I read somewhere that they extended that to 100k when the issues started a couple years ago. I need to find that out for sure though.


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Imagine how much better life would be without ANY car payments (people actually do this!).

Believe me, I know! I was there for a while and it felt good. I just held on for too long.


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Thanks to all of you for all of the valuable advice! I think for now I'll stay put at least until I've built a bit of positive equity. My scores should also be even better at that point. I appreciate all of you!

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On 11/27/2019 at 1:53 PM, cv91915 said:

Imagine how much better life would be without ANY car payments (people actually do this!).

 

My mom does this with all her new cars and she is well, an interesting person to say the least as is her life.

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