I have a fairly new car that I purchased 18 months ago and currently have a payout figure on my secured personal loan of $27k.
This is about $10 500 more than the car is currently worth if I sell it privately.

I would like to buy a cheaper car (around $10-12k) and sell my car. This means that I'll need a loan of roughly $22 000.

Should I apply for another person loan to cover this and sell my car? Any advice appreciated.
Kate

Hi Kate,
Thanks for your question, it seems you have a bit of a dilemma.
Unfortunately, I think that you should stick with the car and the loan. Taking out another loan will only incur more interest and cost you more money over a longer period of time.
Lesson learned, cars are possibly the worst thing to borrow money for in our lives
If you would like to discuss a finance budget to help you get back on track please feel free to get in contact
Best of luck
Scott
Scott.howell@mobilelender.com.au
www.mobilelender.com.au
0435474498

Hi Kate,

It's probably not worth doing. You have a shortfall on your current loan of $10,500 and you will end up in more or less the same position with the new car, and you will have a car worth less than the current car and probably an older car which may not be as mechanically reliable as the first one. And a new lender may not be keen on financing around $10,000 of negative equity in the new car!

If you wanted to talk more about this, please search for me through the "Industry experts" tab and click on my business name under "Name of Business" and all my contact details are there. I would be happy to discuss it further.

Cheers,

Michael Budge
Bayside Finance Group

Hi Kate,

Any loan is secured by the asset it is financing and in your proposed case, you want a loan for $22,000 and the asset (the new car) is only worth $10-12,000 so there is a lot of negative equity in the deal. A lender will always have in the back of their mind "what happens if something goes wrong" and you can't afford to make the repayments. Then you owe $22k and the car is only worth $10k so the lender is out of pocket! Sometimes small amounts of negative equity can be financed but you are asking the lender to finance almost double the value of the car so you can see why a lender would be wary.

All applications are treated on their merits and a decision is made on a case by case basis. As I don't know a lot about your situation, I can't really say whether an application would succeed or not. If you would like to discuss this further, I can't put my contact details in the email because it will be redacted but If you wanted to talk further, please search for me through the "Industry experts" tab and search for my business name under "Name of Business" and all my contact details are there. I would be happy to talk to you.

Cheers,

Michael Budge
Bayside Finance Group

Hi Kate,

I would suggest that you will be better off sticking with your Golf.

Older European cars don't hold their value and can often be extremely expensive to maintain.

Also the extra fees you will incur by paying out early, and new loan origination fees etc could quickly ad up to more than you are looking to reduce the loan by.

Often people find them selves in a position of minus equity with a car, the worst thing you can do is to dig a deeper hole by starting a new loan in an even worse situation than you were previously in.

I would suggest trying to make extra payments to reduce your minus equity as quickly as you can.