Should I take on 2 car loans?
Dear Driving for Dollars,
I need to buy a more family-friendly car, and I'm trying to sell my current car for what I owe as a result. I've had no luck selling it privately, and dealers want to give me about $2,000 less than what I owe.
Is it better for me to buy the new car I need, making payments on both cars until I can sell it (which I could afford), or should I take the hit and roll the negative equity into my new car loan?
Even if driving your current car is a bit of a hassle with a new baby, you already have enough increased expenses, and it would be smartest to avoid car payments on two cars as well as rolling negative equity into your new car loan.
You should be able to get substantially more by selling your car privately versus trading it in at a dealership. Try to sell it privately, and hold off for as long as you can on buying a new car, so you don't make payments on two cars.
Visit the independent car-pricing sites and spec out your exact car, including options, mileage and condition, to see what it's worth in a private party sale. Print out those figures, and start advertising your car at that price or a bit lower. This should allow you to recoup all or most of what you owe versus taking the $2,000 loss by trading it in. If you do trade the car in for a loss, remember that this loss will actually be higher due to the interest you are paying on the negative equity. To see the full impact, use Bankrate's negative equity auto loan payment calculator.
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