Jul
Gas prices and life changes have forced me to want to trade my 350z for a honda fit. But the dealership wont let me finance the fit with negative equity. They stated I could get a used automobile or a truck to hide the equity what’s that supposed to mean. How are they not making out? I was going to tack on 4k negative equity onto a 15k car which i was going to pay full price for. I dont comprehend. They also were low balling me for my vehicle. Anyone know why they do this?
Answer:
Well, first off lets assume that 4k is the true negative amount. You are rollig into a 15k vehicle. That’s 15k before taxes, doc fees etc.
Those fees typically run 10% of the selling price of the vehicle. So that would mean you’re trying to finance $20,500 on a $15,000 car ( 15k sell 1500 fees 4000). That is a 125% advance, assuming $0 down.
Banks right now are super tight on credit. People are defaulting on loans at a record pace. So, they are less inclined to offer those huge over-advances. They want to be under 100% if possible, but some will go to 110% on a lower-end vehicle like this. That means the banks want to loan no more than $16,500 on this automobile - y ou are $4000 away from a deal.
The reason they want you to move to a higher car is that they have the ability to roll the negative to a moe expensive car, where they cant on a lower priced one. Lets state its a $30,000 vehicle. There’s more room to discount the car, plus the advance of 110% means they have the ability to go up to $3000 over the selling price. That is a lot more wiggle room to hide that negative equity.
They are not “low balling” the automobile. They have to account for the market just like anyone else. Lets say the vehicle has a theoretical market value of $15,000 (hypothetically). that means they have the ability to anticipate to sell it for that, if not less. Well, cars that get less than 25mpg are not selling at market any more. So they need to buy it even cheaper to be 'in it right', so they have the ability to sell it and make SOME profit. They have to pay for reconditioning, mechanical inspection, detail, advertising, etc etc. So dealers have to purchase vehicles low so that they can make some profit when they finally do sell.
So thats it in a nutshell. I encourage you to just keep the 350 and pay it off, then drive it til it drops. You will be far ahead financially in the long run.
Answer:
Based upon your credit score, banks will only finance so much negative equity. Used to be 110%, or 120% if great credit, now with the economy in the doldrums, many won’t go out on a limb to finance this much.
Hiding the negative equity… state they’ve a car marked up 5000, they are eating your 4000 negative equity when they are making a 1000 profit. A Honda fit is an entry level automobile, go look on edmunds.com, but off top of my head, entry automobiles ( fit,yaris, versa,cobalt) only have $400 profit in them ( plus holdback and dealer fee of course).
They’re not low balling you, you put yourself into this position. They want to make a deal but to do it need to handle your 4k upside down part. If there used vehicle wasmarked up 5k, they now are not seeing the profit they would if you owned or had positive equity. Basically giving you theirs for more of a wholesale number. Therefore you’ll get the same ( wholesale ) on your trade.
Answer:
If you’re done paying the 350Z then sell it to a private celebration. Use the money to pay full price on the Fit. If you are not done paying the 350Z, you’re stuck.
I'll agree with the person above me and would suggest the same.
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