Underwater on my car HELP!

[Driko]

So here is my situation, I have a 2013 Fiat Abarth 2 door hatchback that is not very practical. Currently my loan is at 4.4% and I owe about 11,800 or so on it. The trade in value is about 7500 bucks. The reason I am afraid to just wait until the loan is up is that these cars can be very lemon like. Luckily the worst thing that has happened is that my headlight connector melted, but I still haven't easily found the part I need to fix it. For most other cars I could probably fix it myself for 6 bucks, but for this car I need to go to the junk yard and find the exact part. Another issue that scares me is that all the dealerships in my area have closed. I actually lost my keys two nights ago and I had to call a dealer 8 hours away and they said to get me a key it would be between 1 week and 3 months.... I really would like to trade for a cheaper car like a Toyota camry or corolla that has much more common parts and much better reliability.

I am not 100% sure on how these things work, but I was hoping that since my car trade in value is 7500 and the car that I want is 6700 I could just do a straight swap and leave my loan intact and just continue to pay it off for the next three years. I would be a lot more confident driving a Toyota for 3 years than my Fiat lol. I have heard though that they typically make you refinance since the Toyota is 6700 and I am underwater 4300 they add 6700+4300 = 11000 and that would be a new interest rate involved etc? I am not sure how all this work so any advice is welcomed. Thank you :)

[plank]

The best way to look at this would be by analyzing your complete financial picture and situation.  Do you have other debts.  Do you NEED a car? How much money do you make?  How long does it take you to save up $4400?  Without that info, it's difficult to give advice tailored to you.

Generally, in your situation, it would probably be best to pay down the car to what it is worth ($4400) then save up cash to buy the car you want ($6700, though you should get something cheaper probably) then sell the old car and buy the new car debt free.

[Driko]

The best way to look at this would be by analyzing your complete financial picture and situation.  Do you have other debts.  Do you NEED a car? How much money do you make?  How long does it take you to save up $4400?  Without that info, it's difficult to give advice tailored to you.

Generally, in your situation, it would probably be best to pay down the car to what it is worth ($4400) then save up cash to buy the car you want ($6700, though you should get something cheaper probably) then sell the old car and buy the new car debt free.

Other than the car loan, I just have a mortgage. My pay varies a lot. My base pay is around 56k, but I was able to make 92k last year, so it really depends. I NEED a car because biking in my city would be a death wish. People get hit all the time (I work in a hospital so I know) Also, I am planning on moving across the country later this year (24 hr drive or so). The city I plan to move to will be probably 30 or so minutes away from the girl I am dating. So I need something fairly reliable and something that could fit car seats. My fiat is not the best choice for kids lol. The reason I am scared to just pay the car off in cash is that for one, I would really like to keep my emergency fund intact because moving across the country into a new job where I only know one person is kinda scary, and number 2, I don't have the best self control with cars so keeping this loan at least until it expires keeps it so I don't keep buying more debt. Hopefully I will hold onto the next car for 10 years or so though because I do hate debt.

[plank]

If you are single and made 92k last year, there is something obvious that you are not mentioning that is holding you back from destroying this car debt.  Again, its very difficult to say without a full picture of your finances.

Best of luck to you.

[NoStacheOhio]

If you're dating a girl across the country, don't worry about whether or not you need to fit car seats just yet.

But seriously, you made $92k last year, and you're worried about an $11k car loan. More info needed.

[plog]

I am not 100% sure on how these things work, but I was hoping that since my car trade in value is 7500 and the car that I want is 6700 I could just do a straight swap and leave my loan intact and just continue to pay it off for the next three years

That's not going to happen so put that out of your mind.  It seems like the most cost effective method for all involved (you, the bank, the car dealer), but 2 of those entities aren't logical beings--they are  bureaucratic organizations with rules and procedures and paperwork.  Balances have to be zeroed out, liens have to be released and issued, titles, bill of sales, etc, etc.   

Usually what people (and by "people" I mean  "people with poor money management skills") do is roll over the amount they are upside down to a new car loan to purchase the new car.  That's option 1.  Option 2 is to get an unsecured loan for enough money to pay off the underwater amount and buy a new car--this will probably be a higher rate, but you get a lien free car and its a little less hassle at the dealershop. 

However, with all that said--the best bet is to post a case study and get your finances in order, because this shouldn't be a crisis with your income--even the low-end income (56k) you have.