Ford Mustang Forum - View Single Post - thinking of switching to 5.0.
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post #46 of (permalink) Old 07-01-2014
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Joined: Jun 2011
Location: Philly
Posts: 946
Originally Posted by Fatopotomus View Post
If you dont re-finance, you're on the hook for $26K. When you roll your car in to trade it in, they will offer you 16K. So now you're on the hook for $10K right off the bat. The dealer will pat you on the back and tell you not to worry, that they will roll your negative equity into the 'deal' for your new car.
For the love of God, this is NOT HOW IT WORKS! You do not owe the total interest fee when you trade in a car that you are still paying on! For example: If the OP trades the car in today and gets offered $14k on the car but he has only paid down the principle on the loan down to $16k. He will need to come up with $2k NOT $12k.

The only time that the OP would legitimately owe $26k on a car with an MSRP of $19k is if he rolled in a substantial amount of negative equity from his previous car, thereby inflating the principle of the current loan.

For the benefit of the OP: You need to find out how much your car is worth vs how much you have left on the principle of your loan. I assume here that you only financed the price of the car and that you didn't roll in any other costs (like what you owed on a previous car). In other words, I am assuming that you took out a $19k car loan and after interest fees, you will have paid a total of $26k. Correct? If this is correct, you need to see how much of a dent you made in knocking down the principle, as this is the only thing that matters for this particular discussion. Then either bring the car to a dealer, CarMax, or look around online to get some idea of what someone will pay you for your car. If you won't get enough on trade for your car than what is left on the principle of the loan, you will either need to pay the difference when you buy another car or roll that amount into the loan for the next car (BAD!).

I don't know what your credit situation is like, but at 6%, you have PLENTY of room to get a lower interest rate. If you end up keeping your V6, consider refinancing. With a lower rate, you will either be having a lower monthly payment or you can pay the same amount that you are now, but more of that payment will go towards the principle and you can pay the car off a little quicker.

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