what to do with this auto loan

[The Stranger]

I owe 18,200 for a car I bought for about 20,400 out the door.

Edmunds values it at $18,587 for dealer
$17,171 private party
$15,677 trade-in.

not including about $1,200 I put into the stereo.

I'm 6 payments into a 60 month loan at 6.55%. My payment is $400.

Now I'm trying to save for a down payment on a first mortgage. I just learned that the bank looks at your existing monthly loan payments to decide how much money you can qualify for. So I figure I should dump this car somehow before I apply for a mortgage. I plan to have the down payment saved in the next 12 to 18 months.

Should I sell the car now, and get a cheaper one? Or should I wait it out?

I really like the car, and having a new reliable car is a big plus for how many miles I drive. (Its an '05 with 35,500 miles)

What should I do?

[Thremp]

Stereo adds ~$0 to value of car depending on type of stereo.


I think what depends is... Can you still qualify for the mortgage you wanna get? I think you semi-screwed yourself FWIW.

[The Stranger]

with the stereo, i can either resell the car to a private party with a markup for the stereo, or if I trade in the car, have the stock system put back in and keep have the custom stuff installed in my next car, but installation runs a couple hundred bucks.

yeah, i bought more car than I can afford, and I'm regretting it. I'm just trying to figure out what to do from here.

btw, the loan is with a credit union. No penalty for early payment, and I can refinance the loan at any time for $50.

So here's a possible idea. Pay off like 10K on that loan in the next year. Refi the remaining 8K over ten years (yes they'll do that at that rate). Which comes out to a $91 payment. Get the mortgage, collect rent from a roommate. Then just wipe out the auto loan whenever I have the cash to do it.

Good idea?

[Thremp]

I kinda like that plan. Doesn't seem too terrible. Might set you back on the potential down payment.

I'm trying to say there is going to be almost no market mark-up for a upgraded stereo. No one is going to care really for a vehicle with fairly high miles. There are so many other things that are more important.

[The Stranger]

well, whenever I sell that car, I'll try to sell it to a private buyer first.

If trade-in value at that time is 12K, I'll try to get 14,and go down to 13 if they want the stock system put back in. If still no luck, I'll put the stock system back in and trade it in.

In any case, swapping a stereo from one vehicle to another is a couple hundred bucks at the most. I don't want to get bogged down on that aspect.

(2 kicker 6" component speakers, 2 Acura stock speakers, 500W 2 channel amp, Alpine head unit with direct iPod connection/control, remote. So when I say $1200, that included getting all of that installed.)

[Thremp]

Yeah usually splitting private party and trade-in is a good bet for where they will sell at. But there are no hard and fast rules.

I'd be suprised if you can get 300 bucks for all that stuff. Used stereo equipment has terrible resale value. Not to mention to remove reinstall even if you can do most of it yourself is a pain.

[Shoe]

Not to sound mean, but you should be able to afford a 20k car loan and mortgage payment at the same time. (Car payment should not be around $385/month for this loan). If you do not have atleast that much of a cushion you are buying too much house, and need to save for a bigger down payment or look for a cheaper house. Houses have lots of other expenses, such as maintenance, insurance, taxes, etc...

[The Stranger]

I live in Los Angeles. Condos basically start at 275K. You can get a half-way decent place in a somewhat sketchy neighborhood for that.

I make about 30K. I currently pay $950 for rent on a 1bed1bath that's like 750sq ft.

Yeah, renting sucks. Now my mom makes like baller monies. So she said she'd help with the downpayment, but its not like she'll bankroll me on a place.

So I figure, get a small two-bedroom. Put up about 10K, moms puts up about 40K, mortgage the 225K I rent out the other bedroom for $500/month, pay HOA dues, do the maintentence and stuff you mentioned, and still save money over what I'm paying now. But the problem is qualifying, because I can't put $500/month anticipated income on a loan application.

BTW mom's help wouldn't be a gift, or a loan, it would be a percentage share of the equity.

[Wake up CALL]

[ QUOTE ]
BTW mom's help wouldn't be a gift, or a loan, it would be a percentage share of the equity.


[/ QUOTE ]

Perfect, in that case have your Mom on the home loan application as well.