Trade With Negative Equity

Buying a Car With No Money Down
Ain't Always Easy!

Can I trade with negative equity and no money down?
A car buying question from Ed in New Jersey...

Great site! Question...I bought a 2007 Limited Ford Explorer after my divorce...I rolled negative equity into the loan. I owe 33k..I hate this truck and really want my Tahoe back..is there anyway I can get an 2010 LTZ with no money down and payments @ $725/mo???

Answer:

Hi Ed,

Thanks for the compliment. Based on what you are looking to do here, it sounds like it will be a tough road to getting your Tahoe. I'm not sure of your credit situation, but in this case, even with excellent credit, you'll probably need a substantial down payment.

Not knowing a whole lot about your Explorer, I'd have to guess that it's only worth in the 15-$18,000 range. I'm sure this is going to make you hate it even more, but unfortunately it's the truth.

Buying a car and trading in one with a bunch of negative equity is tough since lenders these days have tightened up quite a bit and are not allowing big Loan to Value ratios. This means a big down payment is more than likely going to be necessary to trade with negative equity.

This does not apply to all customers, but in your case we're talking about 10 grand or more and even with perfect credit you're probably going to be at least $5000 out of line. That's a very best case scenario.

I wish I could assist you with some guidance here, but quite frankly I think you are pretty far from making this deal happen unless you can come up with 10-$15,000 as a down payment.

You're really in a position where you'll either need the cash to cover, you'll have to bite the bullet and make the payments until it's paid for (or close to it) or if you have GAP Insurance you can hope that it gets stolen in the middle of the night and is never seen again.

Sorry to be the bearer of bad news, but if I can help in any other way I'll sure try...Justin

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