Negative Equity

[kevin1914]

I’m currently Looking at a 2019 Laramie priced at 55k MSRP. The dealer is offering 13k off via combined dealer discount and rebates. My trade has about 8K negative equity. This would put the OTD at about 51k after doc + ad fee.

Is this a wise purchase considering I’m carrying so much negative equity?


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[Smashy71]

Sounds like a need and a want situation. Probably don’t need the new truck but you definitely want it. I got 25k trade in on a 14 bighorn ecodiesel 4x4. Paid 39k for it and drove it for four and a half years. If you can afford it I’d go for it.

 

[kbUSMC2012]

It’s all up to you. Negative equity follows you and eventually you’re gonna have to pay it off, whether that’s in your current truck or a new one. In my experience, negative equity seems to never go away because people are too impatient to wait until it’s paid off, meaning they keep rolling it over into new vehicles because they’re impatient. That being said, I rolled 2500 in negative equity into my truck loan because it saved me almost 3k in taxes with a trade in, so I effectively “broke even” on a dollar basis.

However, don’t let the dealer fool you into thinking that rebates are “paying off” your negative equity. Trucks with deep discounts are great, but that discount is usually reflected in the resale value as well, especially when the manufacturer never seems to end the “deals”. You’re not getting a truck that you could turn around and sell for 55k for less right now.

 

[kevin1914]

Yeah, I’m on the fence. I may just put my car up for sale (private party) before purchasing a new truck. There are some really good incentives on trucks at the moment (most notably the GM 2018 models) but I don’t want to put myself in an even worse position.”


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[kbUSMC2012]

Yeah, I’m on the fence. I may just put my car up for sale (private party) before purchasing a new truck. There are some really good incentives on trucks at the moment (most notably the GM 2018 models) but I don’t want to put myself in an even worse position.”


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You’ll make more through private sale, but keep in mind in most states you’ll save a lot in sales tax by trading in. I could have broke even on my truck had I sold it privately, but then I would have paid 3k in sales tax vice the 300 that I paid because my trade in equity was so high. Check your states law on that. There’s only a handful of states that don’t do that.

 

[Dog Hauler]

I’m currently Looking at a 2019 Laramie priced at 55k MSRP. The dealer is offering 13k off via combined dealer discount and rebates. My trade has about 8K negative equity. This would put the OTD at about 51k after doc + ad fee.

Is this a wise purchase considering I’m carrying so much negative equity?


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If you ever want to get out of your financial hole, stop trading in vehicles when you're upside down. It's not rocket science. And just because you may be able to afford the monthly payment doesn't mean you can afford the truck. Being upside down on the trade is the first clue you can't afford it.

The first rule of getting out of a financial hole, or any hole for that matter , is to stop digging.

 

[kevin1914]

Lol... I purchased my current car about a year and a half ago and it’s just too small. I’ve never traded a car with negative equity in the past, that’s why I’m seeking advice.


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[RenoRam]

Lol... I purchased my current car about a year and a half ago and it’s just too small. I’ve never traded a car with negative equity in the past, that’s why I’m seeking advice.


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Even if you sell privately, you will likely not make up all of the negative amount. At least if you trade it in, the negative amount is financed into your new loan over the course of the loan terms. Might just need to bite the bullet and just make sure you hang onto this one for awhile. Good luck and let us know what you decide.

 

[SacRebel]

Buying a new vehicle in addition to being upside down on your current vehicle makes no sense. Don’t buy because you want this truck, get out of your current vehicle first.

 

[Gman]

The first rule of getting out of a financial hole, or any hole for that matter , is to stop digging.

The way I've heard this; "The first rule of holes is that when you find yourself in one, put down the shovel."

 

[CouchAssault]

If you're planning on keeping the truck for a while you'll be okay.

Is it a good financial decision? Not really. For most people buying a brand new vehicle isn't. It's a luxury.

I rolled 3k in negative equity into mine. But I plan on keeping this thing well past when it's payed off.

Be absolutely sure you're buying the truck you want.

 

[Cummins359]

Bought a lifetime warranty through fca. Keeping this thing until it dissolves.

 

[troutspinner]

Yeah, I’m on the fence. I may just put my car up for sale (private party) before purchasing a new truck. There are some really good incentives on trucks at the moment (most notably the GM 2018 models) but I don’t want to put myself in an even worse position.”


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FWIW, my dealer sent me an e-mail just a few minutes ago "Your last chance at our exclusive offer". This would be the same e-mail they've been sending me for 3 months, they were last chance then as well. Incentives will be there for 19s until the 20s come out, then they'll get better on the 19s to get rid of 19 stock.

 

[rbram]

I’m currently Looking at a 2019 Laramie priced at 55k MSRP. The dealer is offering 13k off via combined dealer discount and rebates. My trade has about 8K negative equity. This would put the OTD at about 51k after doc + ad fee.

Is this a wise purchase considering I’m carrying so much negative equity?


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Like some have mentioned, sometimes it's a wash in relation to private party but then paying taxes vs just paying taxes on the difference in trade. For example. I rolled $1800 over in my trade with my 17 392 charger. If I sold it, I couldn't have made anything because it would be too close to what you could get a new one for so even if i got payoff from private sale, I would turn around and pay $5k in taxes, So by trading it, I only paid $1500 in taxes plus the $1800 I rolled over so $3300 total vs $5k total as if I walked in with no trade / negative to roll over. To me trading and rolling over The $1800 was better than not having a trade. You will only pay taxes on the difference.

 

[John813]

Better make sure you'll keep that truck for a long time if you pull the trigger. Cause if you got to get rid in the near future for whatever reason you'll have more than 8k in negative equity.

What's your current loan amount? You owe 20k/30k/60k on current car?

 

[thcmas35]

pay to play & enjoy life

... sensibly & responsibly
no sense in going YOLO if it's going to cause more pain/headache later.
Be nice to your future self too

 

[thcmas35]

you got a crystal ball?

It is prudent to plan on being here tomorrow vs not being here. There are no guarantees.

 

[Dog Hauler]

It is prudent to plan on being here tomorrow vs not being here. There are no guarantees.

That's the problem with kill-joys. I say f*ck it, live paycheck to paycheck and enjoy life just one unexpected but inevitable expense away from disaster. Spend like it's your last day on earth and figure out tomorrow...well...tomorrow. Or maybe next week. Or the week after. Heck, there's always a payday loan store on the corner. It's the American Way.

Seriously folks, while there are no guarantees in life and your goal may be to die simultaneously with spending your last dollar, it always best to spend prudently so you have enough money to weather downturns in the event you don't die tomorrow. Trading in a vehicle when you're upside down is probably one of the worst financial decisions you can make, especially if you do it one vehicle after the next. Don't mistake being able to make the monthly payment with being able to afford it.

 

[Northeast16SS]

It’s all up to you. Negative equity follows you and eventually you’re gonna have to pay it off, whether that’s in your current truck or a new one. In my experience, negative equity seems to never go away because people are too impatient to wait until it’s paid off, meaning they keep rolling it over into new vehicles because they’re impatient. That being said, I rolled 2500 in negative equity into my truck loan because it saved me almost 3k in taxes with a trade in, so I effectively “broke even” on a dollar basis.

However, don’t let the dealer fool you into thinking that rebates are “paying off” your negative equity. Trucks with deep discounts are great, but that discount is usually reflected in the resale value as well, especially when the manufacturer never seems to end the “deals”. You’re not getting a truck that you could turn around and sell for 55k for less right now.

Me personally, I would wait a year and pay off the truck before I bought a new one. The price of the new ones is only going to keep going down and you will give RAM another year to work out all the kinks in the manufacturing process. As far as equity in cars go, that's why I always bought Toyotas up until recently. They allowed me to gain substantial positive equity and use it to step up into a more expensive vehicle. I paid $27K for my brand new 2009 Tacoma and just sold it for $18,500

 

[Dog Hauler]

I paid $27K for my brand new 2009 Tacoma and just sold it for $18,500

Holy cow!! That can't be, can it? I paid several multiples of that for my current tow vehicle (2014 Mercedes GL) and the Ram dealer offered me $21k for the trade. I declined and figure that on a good day I'll get $30k for it to a private party. Even at that, depreciation is nothing short of brutal on the Merc. Can Toyotas be that much better? Sure as heck the depreciation on my shiny new Ram will also be brutal but the current Tundra dates to about 2008, as I understand it, so wasn't really a serious consideration.