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Old 03-31-2016, 04:10 PM   #1
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To trade or not to trade

So I'm in a bit of a dilemma. A year ago I bought my truck. At the time, I was working full-time in construction management and needed a truck. So I bought one new. It was my dream truck, and I kind of let that cloud my decision. Fast forward a year later, I'm now back in grad school full-time and my truck spends most of its time in the driveway. Unfortunately, Nissan doesn't hold its value in MI (thanks Big Three).

My question for you all is, if you were in my position what would you do? Also feel free to point out anything I've overlooked.

2015 Nissan Frontier
Trade-in Value: $25,000
Amount Owed: $35,000
Car Payment: $650/Month
Insurance Payment: $250/Month
Term: 60 Months Remaining (12 months paid already)

Looking at trading it in for a 2015 Ford Taurus SHO lease.
Car Payment: $650/Month
Insurance Payment: $250/Month
Down Payment: $0
Term: 36 Months

As far as swapping goes...
Pros:
- Gas mileage goes up
- Payment term is lowered by 24 months
- More utility than the truck (I could fit more than 2 people)
- Credit score would go up

Cons:
- Payment is roughly the same across the board
- No more towing
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Old 03-31-2016, 04:26 PM   #2
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Why is your insurance so high is my first question. Holy crap.

Secondly you are going to eat a ton trading that thing in. Don't forget the tax and title on the new car. Still applies for the lease.

I'd try to sell the truck private party or keep it a few more years so you are not upside down
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Old 03-31-2016, 04:29 PM   #3
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Why is your insurance so high is my first question. Holy crap.

Secondly you are going to eat a ton trading that thing in. Don't forget the tax and title on the new car. Still applies for the lease.

I'd try to sell the truck private party or keep it a few more years so you are not upside down
I live within walking distance of the Detroit city limits. Also, I live in one of the highest populated cities in Michigan. That combination leads to high rates around here, even though I have a spotless record.

The SHO has around 8K in rebates, which is what will eat a majority of my negative equity. Tax and title will be a minor ***** though.

Selling the truck private party would still leave me with about a $10,000 difference to make up. So sitting on it would work a little better given those two options.

It just pisses me off having something impractical sitting in my driveway. At least with the SHO I could drive it daily and actually fit people in my car for once.
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Old 03-31-2016, 04:43 PM   #4
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To trade or not to trade

From a financial standpoint I would keep the truck. Seems like the payment would be the same so at least your paying towards some kind of equity in something you will own. With the lease at the end of the terms you give the car back and don't have anything.

But at the end of the day you only live once so if your would prefer something else go for it.


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Old 03-31-2016, 05:03 PM   #5
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Holy sh*t a Nissan Frontier was more than $35k new? Now I can see why people just move up to a half ton for the same money.

What are you basing the trade in value on? Just because blue book or NADA says it's worth one thing doesn't mean the dealer will entertain that price. If they plan on sending it to auction, they will evaluate what similar trucks are going for in your area/state. If the market is soft, then they will likely lowball the h*ll out of you. Just a warning, not saying you can't play ball, but expect them to squeeze the most profit by lowballing you.

One other thing is have you considered the pros/cons of leasing. What is your mileage cap? 10,500? 12,000? Will that be enough? Typical excess mileage charge thru Ford is $.25/mile. Not much but it can add up if you're thousands over.

Also at the end of your lease you have two options:
1. purchase the car which is almost never recommended as you end up paying more for the car after all the lease payments than if you simply financed or purchased it to begin with.
2. turn the car in and start a new lease or purchase a different vehicle.

Either way in 3 years you will have to either get a new vehicle or buy the current one. You will most likely have a car payment either way.
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Old 03-31-2016, 05:06 PM   #6
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Hm, well the problem at this point is you are upside down on your truck.

One option is to go to the company that has the loan and negotiate with them for a loan for the difference of $10k. So basically the car is worth $25k and you owe $35k, so you would then be making payments on a $10k loan instead of a $35k loan, but you'd have to get rid of the truck and not replace it at this time. This might not be a bad solution since it's spring time and you don't have to worry about snow for quite some time. When winter comes back you can look into leasing a vehicle that can handle the winter weather.

Pros:
Lower loan payment
Lower overall insurance payment

Cons:
1 vehicle
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Old 03-31-2016, 05:13 PM   #7
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Hm, well the problem at this point is you are upside down on your truck.

One option is to go to the company that has the loan and negotiate with them for a loan for the difference of $10k. So basically the car is worth $25k and you owe $35k, so you would then be making payments on a $10k loan instead of a $35k loan, but you'd have to get rid of the truck and not replace it at this time. This might not be a bad solution since it's spring time and you don't have to worry about snow for quite some time. When winter comes back you can look into leasing a vehicle that can handle the winter weather.

Pros:
Lower loan payment
Lower overall insurance payment

Cons:
1 vehicle
Yeah, if they would do that it would be huge. Being down a vehicle wouldn't bother me. $900/month in savings would probably be more than the amount I'd have to pay per month for the $10,000. I'll give them a call and see what they say.
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Old 03-31-2016, 05:14 PM   #8
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Yeah, if they would do that it would be huge. Being down a vehicle wouldn't bother me. $900/month in savings would probably be more than the amount I'd have to pay per month for the $10,000. I'll give them a call and see what they say.
Yep, as long as you have good credit it shouldn't be an issue. Good luck!
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Old 03-31-2016, 05:26 PM   #9
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Out of those two options, I would keep the truck.

Consider the long range financial outlook. In three years you will either have: 1) a four year old truck with low miles and only 12 payments remaining, in which you have already passed the time for the steepest depreciation and will have a truck that is still worth between 10-15k, or 2) deciding whether the buy out Taurus after lease, or leasing/purchasing different vehicle, with no equity in the Taurus.

Another option I would consider is simply buying a 2013 SHO Taurus, certified pre-owned, for around 30k or less if you absolutely are wanting to get rid of the truck.
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Old 04-01-2016, 03:21 AM   #10
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You're insurance on the new car is going to be more, as the 10K you owe on the truck that gets rolled into the new car (unless you pay it as a down payment) will force you to have gap insurance on the new vehicle. Gap insurance covers the additional cost of the new car lease/purchase over what it is worth, meaning, it covers the fact that you are financing more then the car is worth, and therefore covers the cost to the lien holder if the car gets totaled in an accident. For example, If the car you are buying costs $20,000, but you role over $10,000 from the trade in, then you will have to have gap insurance to cover the additional $10,000 to the lien holder.
Gap insurance is an additional cost to the normal insurance coverage required in your state. Most lien holders require full coverage when a loan is involved.
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Old 04-01-2016, 08:07 AM   #11
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Honestly it sounds like you need to sell the truck and pay the negative equity through a loan or out of pocket. Buy something for cash and save money.

$50k for a mid size truck is excessive for anyone...

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Old 04-01-2016, 05:20 PM   #12
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You're insurance on the new car is going to be more, as the 10K you owe on the truck that gets rolled into the new car (unless you pay it as a down payment) will force you to have gap insurance on the new vehicle. Gap insurance covers the additional cost of the new car lease/purchase over what it is worth, meaning, it covers the fact that you are financing more then the car is worth, and therefore covers the cost to the lien holder if the car gets totaled in an accident. For example, If the car you are buying costs $20,000, but you role over $10,000 from the trade in, then you will have to have gap insurance to cover the additional $10,000 to the lien holder.
Gap insurance is an additional cost to the normal insurance coverage required in your state. Most lien holders require full coverage when a loan is involved.
The $8K in incentives on the car would eat most of the negative equity. GAP insurance would probably still be needed. I currently have GAP on the truck.

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Honestly it sounds like you need to sell the truck and pay the negative equity through a loan or out of pocket. Buy something for cash and save money.

$50k for a mid size truck is excessive for anyone...
The downside their is either a lien on the vehicle or voluntary surrender. Neither of which is good for your credit rating.

The truck was originally $30K. After a small rollover from my lemon, extended warranty, GAP insurance, etc... the price climbed to $40K. Wasn't an issue at the since I was using the truck for work, they were paying for it, and I was putting miles on it like crazy.

The way I see it I have two end results:
A) Lease ends, I also have the Mustang paid off ($200/month saved). If the Taurus is reasonably priced, I'll buy it. If not, I'll buy a Focus Hatchback for 10-12K (winter beater). I would also have zero debt on my credit score outside of student loans.

B) I keep the truck until the day the Taurus lease would've ended. I'll still have 24 months of payments remaining. The truck will be worth roughly $5K in positive equity. I would have no debt with the exception of the truck and student loans.

Getting the $35K off my credit score would be big. Even if it's replaced by the roughly $25K of the Taurus lease. I wou

Also, if it makes a difference, I'm on a fixed income that is virtually gauranteed until March 2020.
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Old 04-01-2016, 05:30 PM   #13
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I wouldn't pay the negative equity out of pocket I would do the lease deal and in three years turn the freaking Taurus in and your off the hook. Then you can buy whatever you want


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Old 04-01-2016, 05:42 PM   #14
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Any reason your against selling the truck and using the mustang as a DD? Or possible trade the truck and mustang in to get out of having negative equity in a vehicle? Or selling the mustang ?

Assuming you have a reasonable income (not extremely wealthy) 900 dollars a month is a ton for a car and it sounds like your payment more on the mustang as well. That is around what a lot of people pay for a mortgage or rent. Is the insurance for both cars or just the truck?


Food for thought If you paid 40 for the truck and a year later you owe 35 on it and your payment is 650 That means you paid 7800 towards the car and only reduced principle by 5000. That's 2800 a year in interest or fees. Personally I would get rid of one of the cars start saving for a down payment and buy a car with a decent down payment. Result would be lower interest rate (assuming good credit) and less money being wasted on interest, gap insurance, etc. and after a while that will lead to more disposable income for mods, down payment on a newer car down the road, house, etc. at the end of the day it sounds like you must have good income to afford your current vehicles but it would bother me if I was paying that much in fees and interest.


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Old 04-01-2016, 06:01 PM   #15
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Any reason your against selling the truck and using the mustang as a DD? Or possible trade the truck and mustang in to get out of having negative equity in a vehicle? Or selling the mustang ?

Assuming you have a reasonable income (not extremely wealthy) 900 dollars a month is a ton for a car and it sounds like your payment more on the mustang as well. That is around what a lot of people pay for a mortgage or rent. Is the insurance for both cars or just the truck?


Food for thought If you paid 40 for the truck and a year later you owe 35 on it and your payment is 650 That means you paid 7800 towards the car and only reduced principle by 5000. That's 2800 a year in interest or fees. Personally I would get rid of one of the cars start saving for a down payment and buy a car with a decent down payment. Result would be lower interest rate (assuming good credit) and less money being wasted on interest, gap insurance, etc. and after a while that will lead to more disposable income for mods, down payment on a newer car down the road, house, etc. at the end of the day it sounds like you must have good income to afford your current vehicles but it would bother me if I was paying that much in fees and interest.
I'm against outright selling the truck because I have no way of making up the current $10K right now. The only ways to do so will potentially hurt my credit score.

The Mustang is my DD. However I don't drive it during winter.

I won't sell the Mustang. A) I love it. B) I have positive equity on it. C) The payment and insurance on it is cheap by comparison ($400 combined).

The truck was originally financed at roughly $41,000 for 72 months at 3.75%. My three mistakes were buying new, no down payment, and overly long term. The lease will allow me to pay the Mustang off quicker and also start from scratch. The next car will be sub-15K, 4% or less, and 36 months max term.

For those younger forum members, LEARN FROM MY MISTAKE!
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Old 04-01-2016, 09:03 PM   #16
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I just couldn't stomach $650 for a car note. That is more than my house note with escrow included.

If this will get you to your goal and you have the funds to keep paying that much then go for it.

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Old 04-01-2016, 10:50 PM   #17
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Old 04-01-2016, 10:52 PM   #18
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Why is your insurance so high is my first question. Holy crap.

Secondly you are going to eat a ton trading that thing in. Don't forget the tax and title on the new car. Still applies for the lease.

I'd try to sell the truck private party or keep it a few more years so you are not upside down

+1


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Old 04-01-2016, 11:22 PM   #19
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Keep in mind that a lease is just making payments on the car's depreciation over the term of the lease (+ interest).
Leases are an incredibly slippery slope, as the dealer can adjust things within the small print to make almost any lease financially feasible.........or just hose the person leasing with two things:

1. Pay attention to the residual value they are placing on the Taurus at the end of the lease. Then look at three year old cars similar to yours in Kelly Blue Book or NADA. If the residual is very high, they are placing it there to keep your payments low, but your choice to buy at the end of the term will not be as financially attractive. If the residual is low, they may be hosing you on the lease payments....but you could buy it for that price at the end of the lease. If you still walk away from a low residual, the dealer then gets to sell the car for a much higher price than what you paid it down to.
2. Make sure what the miles per year are in the lease. The dealer can lower an initial payment by giving you a "very low miles" lease --- typically far less than 10,000 miles a year. This means two things....1. The car will be a low miles car in three years, and therefore worth more (higher residual = lower lease payments) or ....2. You will go over the stated miles per year and get charged for each mile over = hosed!
Read the small print VERY carefully, my friend. If you told the dealer anything like -- "I'd like to have my lease payments be no more than $650 a month" -- you have given them a ticket on the A Train to adjust the lease terms to be most favorable for them.
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Old 04-02-2016, 12:20 AM   #20
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^or because they know you are already paying 650 they figure why not keep it the same way.
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Old 04-02-2016, 01:04 AM   #21
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I just couldn't stomach $650 for a car note. That is more than my house note with escrow included.

If this will get you to your goal and you have the funds to keep paying that much then go for it.

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Wow 650 for a house payment that won't even get you an apartment in these parts...


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Old 04-02-2016, 11:45 AM   #22
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Wow 650 for a house payment that won't even get you an apartment in these parts...


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Won't get you much of an apt here either. Took advantage of the crash in 2010. 3/2 corner lot with garage. Selling soon for land.

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Old 04-02-2016, 05:41 PM   #23
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Took the SHO and LOVE it.

Combined debt between the Frontier and Mustang originally: $48,000
Combined debt between the Taurus and Mustang now: $40,000

Payments dropped by $50/month and insurance by $25/month. Buyout on the Taurus is $17,500 which is within $1,000 of what would be owed on the truck with two years left (same time as lease turn in).

Between the $9,5000 in cash incentives and my friend (the salesman) working some magic, we cut negative equity to $6,000. The incentives made up for the negative equity and more. Took the extra cash back and car payments I would've made this month and paid off a credit card.
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Old 04-02-2016, 05:49 PM   #24
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Took the SHO.
Congrats on the new car. The SHO is a nice car for sure.
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Old 04-10-2016, 09:21 PM   #25
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Why is your insurance so high is my first question. Holy crap.

Secondly you are going to eat a ton trading that thing in. Don't forget the tax and title on the new car. Still applies for the lease.

I'd try to sell the truck private party or keep it a few more years so you are not upside down
Its because Mi insurance is an awful scam!! Everyones is high. Some people pay $150 a month for just no fault PLPD insurance with basically no coverage. Its awful and really hurts financially. I cant even talk about it, makes me too mad.

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