Trade With Negative Equity

A car buying question from Ed in New Jersey...
Can I trade with negative equity?

Justin:

Great site! Question...I bought a 2007 Limited Ford Explorer after my divorce...I rolled negative equity into the loan. I owe 33k..I hate this truck and really want my Tahoe back..is there anyway I can get an 2010 LTZ with no money down and payments @ $725/mo???

Answer:

Hi Ed,

Thanks for the compliment. Based on what you are looking to do here, it sounds like it will be a tough road to getting your Tahoe. I'm not sure of your credit situation, but in this case, even with excellent credit, you'll probably need a substantial down payment.

Not knowing a whole lot about your Explorer, I'd have to guess that it's only worth in the 15-$18,000 range. I'm sure this is going to make you hate it even more, but unfortunately it's the truth.

Lenders these days have tightened up quite a bit and are not allowing big Loan to Value ratios, which means a big down payment is more than likely going to be necessary to trade with negative equity. I wish I could assist you with some guidance here, but quite frankly I think you are pretty far from making this deal happen unless you can come up with 10-$15,000 as a down payment.

Sorry to be the bearer of bad news, but if I can help in any way, please let me know...Justin

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