Is it possible to trade in with Negative Equity?

[rntrubi]

I've searched various words, combination of words, and have not located an answer, if there is one I am very sorry for the repeat question, and maybe can be sent to the correct link.

Here is the situration:  We currently have a 2006 Fleetwood Excursion 39S model diesel pusher, I was out of work for a few months, so we have gone through the savings.  Now that I'm back to work with less income we are now struggling to make the payment and enjoy our coach at the same time.

The question:  Does anyone know if negative equity can be carried over to a new loan?  We live in CA, bought the coach new and has approximately 6,000 miles on it.

Any help/advise anyone has will be greatly appreciated.

 

[Tom]

Are you talking about a new loan (or refinance) of the existing coach, or are you talking about trading the coach in for a different RV? Either way, I'd think you'd need to talk with some lenders about that.

 

[Ray D]

Yes, to both. It is possible to trade vehicles (trade in) when you have negative equity. It is almost common practice. I know many who have done that. It does leave you with a very negative equity on your new purchase, and is a trap I would avoid.  To each his own.  :-\

For a Re-Fi: We recently purchased a new stick house. In the financial rukus during and immediately following the transaction, we became the target for all kinds of financing/credit opportunities. (Mostly, credit cards.) One bank went after our motorhome loan. They finally got us by offering a rate, 2% below the rate we were paying and with no loan-transaction fees, of any kind. They stretched the loan back to 15 years, lowering the payment by 40% due to the stretch. I do not plan to take anything like 15 years to pay it out, but the current payment is no stress on our budget, at all. I'll be in negative equity, for quite a while.

Actually, as I think about it, most of our credit offers are to refinance the house we just bought! I get two or three of those, a day!   These are substandard real estate offers of the same kind that got this country into the current recession! Nobody learned nothing!  

And, I don't care. On the one hand, we can't sell the coach for what we owe on it. On the other, we love it, and had no plans to sell it to start with. We would not be able to buy as nice as we have, for what we could sell this one for.  We're keeping it!  8) ;D

Ray D  ;D

More: A new loan for a re-fi or a  purchase has not so much to do with the value of your collateral, and a whole lot to do with your credit score. Pull one or more of your free annual credit reports, and pay the extra fee to get your credit score included. That will tell you where you stand. Below 700 - not good. I think the max is 850, and the closer you are to that, the better your chances.

 

[rntrubi]

Thank you very much for the information.  To answer Tom's question, we are talking about trading our current RV for a less expensive one to lower the payment, and have the negative equity added to the new RV loan (if we go this route). 

We'd really like to keep our current RV, but the payments are killing us.  Our credit is excellent, 700+, but with our current situation it could change if we don't somehow lower our payments on the MH.  We've talked about taking a 2nd on the house, but we don't want to be upside down on that as well.  Not sure what the best approach is.  Our current lender, B of A, don't have any "good" options. 

I appreciate all the info, this is great!! 

 

[Jack Nichols]

"Actually, as I think about it, most of our credit offers are to refinance the house we just bought! I get two or three of those, a day!  These are substandard real estate offers of the same kind that got this country into the current recession! Nobody learned nothing! 

When I see ads for financing deals that "require no social security number", or "no credit check", I fell the same thing.  Until people are responsible, or are made responsible, then it is going to happen all over again.

Good luck with your refi - people are desperate enough to be innovative now, so you should be able to find someone that can do a deal that you can live with.  Be careful of fees, and be careful the deal you get does not include a balloon payment down the line.

 

[Ray D]

My finance knowledge is dated, so take this with a small grain of salt - but, trading down, with a negative equity is difficult to do. There are certain disadvantages to the dealer. The big one is operating capitol. If he trades up (as you trade down), he has to come up with cash to finance the trade - the opposite of what he wants to do. He's going to want to buy your unit at a lower price than if you were trading up.

Then, you trade a "small" upsidedown position for a larger one. If you move from a 20% upside down position to an RV of half the value, then you double your upside down position. (We're disregarding the dealer's profit, for the sake of simplicity.) That will be hard for a financial institution to swallow and a hard sell for the dealer, that is if he has any interest at all, in the deal.

Also, you are selling into a buyers market, a position of weakness. Selling down, into that market, amplifies your loss. Yes, you get the buyer's bonus on the trade, but it is a smaller number, right out of your pocket.

In short, unless you are getting out of RVing, altogether, you are driving the best buy you are likely to find.

Good luck. I'll go rain on someone elses parade, for a while, now.  :

Ray D  ;D

 

[workingtorv]

Can you not just go to your lender to refinance like someone else mentioned and just stretch the length of the borrowing time?  I think that this option would be your best option because it sounds like if you trade down you are putting yourself if a worse position for something of a lesser nature.