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 Dear
Terry,
My husband and I owe $23,600 on his 2006 Mustang GT and the trade-in value is about $19,000. We have to do something to lower the monthly payments and refinancing is not an option.
Would it be better to use our tax refund to lower the loan to $20,000 and trade it in for a Ford Escape that is just under $18,000? Or, should we keep trying to make payments as long as we can to lower the total on the current loan?
If we do trade it in, would we have any room to negotiate the asking price or try for a good interest rate?
-- Kristi
 Dear
Kristi,
Depending on the size of your tax refund, your best bet would be to pay down the loan so it equals the value of your Mustang. Then you'll be in a better position to get into a more affordable car. The loan rate on a new car will depend on your credit score, the length of the loan and the size of your down payment.
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