Author Topic: Should I sell a car with negative equity?  (Read 1666 times)


  • 5 O'Clock Shadow
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Should I sell a car with negative equity?
« on: January 13, 2019, 01:53:08 AM »
I made a financial mistake in buying a certified used car in October 2017. Sure it was fun initially to have a like new car with all  the bells and whistles, but this was before I started reading MMM. I also bought the car without trading in my previous vehicle. I want to sell both cars, but the like new car is worth less than what I owe (~ 26,000 with estimated KBB trade in value of ~23,000). The other car is worth $300. Id like to trade in both cars and buy a used economy car (likely Honda Fit) in cash for less  than $8,000. Heres the dilemma, Ive already paid $13,000 in the deposit and car payments thus far. I hate the idea of losing the money Ive already spent on the car, but also hate the idea of continuing to make car payments on a piece of depreciating metal. Ive received mixed advice from friends and family with some saying I should keep the car as I will either have a car payment or a car repair bill each month. Would I be financially better off in the long run to switch to the economy car or keep paying on this like new car?


  • Bristles
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Re: Should I sell a car with negative equity?
« Reply #1 on: January 13, 2019, 04:25:35 AM »
You're better off dumping it. However, don't trade it in. Private party sales always come out better.


  • Handlebar Stache
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Re: Should I sell a car with negative equity?
« Reply #2 on: January 13, 2019, 06:56:21 AM »
Take the new car to CarMax and see what they'll offer for it. That would give you an absolute bottom line figure when selling it privately or trading it in. As suggested, selling privately should get you a better price. If you live in a state where trade-in value is deducted from the sales tax calculation for the new vehicle, take that into account too.

If getting rid of the car only nets $23k, and you spend $8k for a replacement, then you're saving $15k over the next few years. Maintenance costs will be less on something like a Fit (especially if you buy a stick shift). You didn't say what your current car is, but if it's German, then it will cost a lot as it ages.

When you start looking at replacement cars, make sure you get something that has been maintained. If it's due for brakes, tires, etc, make sure that work has been done as part of the deal. Watch out for dealers who put crappy 'new' tires on their cars.

Brother Esau

  • Pencil Stache
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Re: Should I sell a car with negative equity?
« Reply #3 on: January 13, 2019, 08:19:23 AM »
I, and many others, have made the same mistake with buying more car than one can afford. I bought a brand new big ass pick up truck once because I "deserved" it for working so hard. Was under water with it as soon as I drove off the lot. After about 2 years with it, traded it in for a vehicle about half the cost. Don't recall how much $ I wasted but it was well worth it to get into a more economical and efficient car. One of the worst $ mistakes I ever made. Oh to be young and dumb!

Needless, to say...I would get rid of both cars and move onto something more sensible.


  • Stubble
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Re: Should I sell a car with negative equity?
« Reply #4 on: January 14, 2019, 08:13:07 AM »
As suggested, sell it yourself as a private party. I cant believe the number of folks who simply trade in their vehicle because of the convenience. Ive sold a dozen vehicles / campers / motorcycles, and I usually get about 25-50%  more than if I had traded it in. If the KBB trade in is $23,000, then I woold check AutoTrader / / etc for the same car, same mileage, and see what your car is actually selling for. I suspect it will be around $30-32k,  which is what Id lost it for.

Car Jack

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Re: Should I sell a car with negative equity?
« Reply #5 on: January 14, 2019, 08:44:02 AM »
Depending on the car make, you might be able to cancel the "certified" part and get a bunch of money back.  Subaru Certified cars are simply those that the dealer pays for the 7 year/100k mile, zero deductible Subaru extended warranty.  This can be pro-rated refunded at any time.  I don't know if your car has this ability, but it's worth checking out.