I am around 3-4k upside down on my vehicle. I have 4 years left on the loan. Should I sell and pay off the negative equity or should I keep the vehicle for the remainder of the loan and put that 3-4k towards the principal and cut 1.5 years off the loan payment?
I can't answer you, but I can give you some questions to think about. Maybe some will help you decide. If you sell, will you have to buy another car? If so, unless the next car is worth much less than this one, you're probably better off keeping this one, and doubling up on the payments. Do you have enough cash to pay the $3-4K so that you're no longer upside down? Then it's up to you - do you feel better having the cash in the bank to act as a cushion, or can you put it somewhere that will earn more than the interest costs you for the loan? Only you can make that call. As a general rule of thumb - if you can't pay the vehicle off in 3 years, you can't afford it. The next time you buy a car, either come up with more for a down payment, or make bigger payments, or get a cheaper car.
Keep in mind. It's a really bad time to sell a car - with the crappy economy no ones buying (except for hybrids.) And dealerships are giving close to nothing on trade ins. Also depends on what kind of car you have, Toyota's and Honda's will keep their value. most others, will greatly depreicate esp. the SUV's and other gas guzzlers. I know it sucks, but I would wait a few more years to sell. or if you can (as suggested), put the 3-4k towards the principal and cut 1.5 years off the loan payment. You'll end up saving money (interest is the killer) and you will payment free sooner :)
You will still have a car payment if you sell the car and have negative equity on it. It will basically be making a car payment but without a car. You will be paying alot less and maybe you can sell it and put that toward what you still owe to make it even cheaper. Me and my bf just sold our car that we were upside down in and had to get a personal loan for the rest of the amount we owed but its way better then forcing ourselves to drain our wallet on a car payment. Just buy a cheaper car, after a while save your money, pay off the amount you owe and you will be good to go.
You will still have a car payment if you sell the car and have negative equity on it. It will basically be making a car payment but without a car. You will be paying alot less and maybe you can sell it and put that toward what you still owe to make it even cheaper. Me and my bf just sold our car that we were upside down in and had to get a personal loan for the rest of the amount we owed but its way better then forcing ourselves to drain our wallet on a car payment. Just buy a cheaper car, after a while save your money, pay off the amount you owe and you will be good to go.
I can't answer you, but I can give you some questions to think about. Maybe some will help you decide. If you sell, will you have to buy another car? If so, unless the next car is worth much less than this one, you're probably better off keeping this one, and doubling up on the payments. Do you have enough cash to pay the $3-4K so that you're no longer upside down? Then it's up to you - do you feel better having the cash in the bank to act as a cushion, or can you put it somewhere that will earn more than the interest costs you for the loan? Only you can make that call. As a general rule of thumb - if you can't pay the vehicle off in 3 years, you can't afford it. The next time you buy a car, either come up with more for a down payment, or make bigger payments, or get a cheaper car.
Keep in mind. It's a really bad time to sell a car - with the crappy economy no ones buying (except for hybrids.) And dealerships are giving close to nothing on trade ins. Also depends on what kind of car you have, Toyota's and Honda's will keep their value. most others, will greatly depreicate esp. the SUV's and other gas guzzlers. I know it sucks, but I would wait a few more years to sell. or if you can (as suggested), put the 3-4k towards the principal and cut 1.5 years off the loan payment. You'll end up saving money (interest is the killer) and you will payment free sooner :)
