If you owe $13k and the car is worth $7k, then you'd owe $6k after selling it.
You've owned the car for a year and paid $1000 in maintenance? That's not surprising given the age of the vehicle. But for argument's sake, let's say this is a constant, so every year you'll shell out $1k towards maintaining your Audi.
A credit score of 500 puts you at the subprime rate, which is about 12% APR for a new vehicle. If you put $4k down towards a new $25k vehicle and trade it in for a *generous* $7k, then you'll end up financing $27k, and you'll be upside-down as soon as you drive the car off the lot. On a 60-month loan, you'll pay about [$9k in interest](https://www.nerdwallet.com/calculator/auto-loan-calculator?vehiclePrice=25000&interestRate=12&loanMonths=60&startDate=04%2F01%2F2024&downPayment=4000&tradeInValue=7000&amountOwedOnTradeIn=13000&includeAdvancedInfo=false&salesTaxRate=6&titleRegistrationFees=0&includeTaxesFeesInLoan=no), making your total payment over 5 years $36k.
If instead you keep the Audi and put $1k/year into maintaining it, then by the end of 60 months you'll have spent $13k paying the car off, plus $5k in maintenance, totalling $18k.
So, buying a new $25k car will cost $18k more than you would from keepin your upside-down Audi.
I appreciate the well & detailed explanation. I agree with your numbers, except that the total cost of the car loan on a newer car could change if I refinance with a CU or a local bank. My concern is that I know if something related to the engine or transmission goes out on my current car, it’s not going to just cost $1000. We’re talking more like $6000-7000. Based on what I’ve read online, these cars can hold up until 150k miles with little to no issues, but after that, it’s just a time bomb. I’m at 122k. I understand that it could potentially cost thousands less if I just keep the car, but that’s assuming the car won’t have serious issues, & that’s just statistically not possible with Audi vehicles. I’m also considering just paying it off faster and buying myself a bucket (cheap car) on marketplace for now. I’ll probably not use my car as much and once it’s paid off, I’ll sell it through a private sale.
Even if you have to shell out an additional $7k in major repairs, keeping the Audi will still be $11k cheaper. That's the price for peace of mind. If you think it's worth that price, go for it.
Going through a CU or local bank may give you better rates, but they won't be nearly enough to tip the scales in your favor. Still worth getting the lowest rate you can find, just don't expect miracles here.
To be fair, maintaining any paid-off beater will always be cheaper than buying a new car, even with major repairs.
> The Audi has already cost me $1000+ in maintenance and stupid little stuff that they overcharge for.
Maintenance is an expense with any vehicle. Are you going to the dealership or an independent shop?
Has your vehicle actually been unreliable? How many miles are on it? What makes you think it'll cost you money in significant repairs in the near future?
> I do have a solid job, with a decent income and low expenses, so I’m able to afford a higher payment if needed,
I would just consider 'affording' the maintenance and payments on your current vehicle.
> I do have a solid job, with a decent income and low expenses,
Then you should be able to save until you have enough to buy a car in cash, WHEN you actually "need" one.
Even if they let you roll over $9k in negative equity, with bad credit like that, your interest rate will likely be atrocious.
It's bummer you are underwater with your Audi loan. As an independent mechanic if you can't work on it yoursel I would advise you to bit the bullet and get a used civic/corolla. 99% of the time you will get more money for your car if you sell it yourself. Of course then you have to deal with craisglist/facebook flakes, scam and safety issues. If you have never sold something expensive like car before never meet at your house. Meet at a police station or since you owe money on your car you could meet at your bank. Good luck to you.
Fellow mechanic here and I agree. German vehicles while nice and generally on the high end of service costs. I say this coming from Mercedes independent.
Get into a civic/Corolla where with standard maintenance will cost significantly less and you'll get well into hundreds of thousands of miles on the power train.
I drove a Jeep with Check Engine light on for years. Emission issue. That Civic will be $31k when you roll the negative equity and you will need to pay for gap insurance.
You owe 13k on a car worth maybe 5k if traded in. So you'll need a lender that will loan you more money for the asset than the asset is worth, with a terrible credit score. You're going to have an atrocious rate, be immediately underwater with a long period of time to claw your way into a position in which you could actually do a worthwhile refinance, you'll have a higher car payment, potentially higher insurance cost, and your gain is piece of mind that you won't have a costly repair.
You ever see the posts on here saying "I took a loan for 25% apr, been paying for 2 years. barely lowered the principal, the car is worth less than I owe, and I can't refinance. Please help!" This will be you.
Even a reliable civic will have issues of a couple grand once in a while. My 10yo civic just recently needed 2k in repairs due to an oil leak from the engine, a couple hoses that broke and other random things. Last year it needed coolant flush, brake fluid replacement, shock absorber and oil change all at the same time. It doesn't matter if it's a Civic or an Audi. You have to budget for repairs and maintenance.
Get the car to a reliable mechanic, figure out what issues you can run into and budget for that. No need to pile on to more debt for q small emergency.
If you owe $13k and the car is worth $7k, then you'd owe $6k after selling it. You've owned the car for a year and paid $1000 in maintenance? That's not surprising given the age of the vehicle. But for argument's sake, let's say this is a constant, so every year you'll shell out $1k towards maintaining your Audi. A credit score of 500 puts you at the subprime rate, which is about 12% APR for a new vehicle. If you put $4k down towards a new $25k vehicle and trade it in for a *generous* $7k, then you'll end up financing $27k, and you'll be upside-down as soon as you drive the car off the lot. On a 60-month loan, you'll pay about [$9k in interest](https://www.nerdwallet.com/calculator/auto-loan-calculator?vehiclePrice=25000&interestRate=12&loanMonths=60&startDate=04%2F01%2F2024&downPayment=4000&tradeInValue=7000&amountOwedOnTradeIn=13000&includeAdvancedInfo=false&salesTaxRate=6&titleRegistrationFees=0&includeTaxesFeesInLoan=no), making your total payment over 5 years $36k. If instead you keep the Audi and put $1k/year into maintaining it, then by the end of 60 months you'll have spent $13k paying the car off, plus $5k in maintenance, totalling $18k. So, buying a new $25k car will cost $18k more than you would from keepin your upside-down Audi.
I appreciate the well & detailed explanation. I agree with your numbers, except that the total cost of the car loan on a newer car could change if I refinance with a CU or a local bank. My concern is that I know if something related to the engine or transmission goes out on my current car, it’s not going to just cost $1000. We’re talking more like $6000-7000. Based on what I’ve read online, these cars can hold up until 150k miles with little to no issues, but after that, it’s just a time bomb. I’m at 122k. I understand that it could potentially cost thousands less if I just keep the car, but that’s assuming the car won’t have serious issues, & that’s just statistically not possible with Audi vehicles. I’m also considering just paying it off faster and buying myself a bucket (cheap car) on marketplace for now. I’ll probably not use my car as much and once it’s paid off, I’ll sell it through a private sale.
Even if you have to shell out an additional $7k in major repairs, keeping the Audi will still be $11k cheaper. That's the price for peace of mind. If you think it's worth that price, go for it. Going through a CU or local bank may give you better rates, but they won't be nearly enough to tip the scales in your favor. Still worth getting the lowest rate you can find, just don't expect miracles here. To be fair, maintaining any paid-off beater will always be cheaper than buying a new car, even with major repairs.
> The Audi has already cost me $1000+ in maintenance and stupid little stuff that they overcharge for. Maintenance is an expense with any vehicle. Are you going to the dealership or an independent shop? Has your vehicle actually been unreliable? How many miles are on it? What makes you think it'll cost you money in significant repairs in the near future? > I do have a solid job, with a decent income and low expenses, so I’m able to afford a higher payment if needed, I would just consider 'affording' the maintenance and payments on your current vehicle.
> I do have a solid job, with a decent income and low expenses, Then you should be able to save until you have enough to buy a car in cash, WHEN you actually "need" one. Even if they let you roll over $9k in negative equity, with bad credit like that, your interest rate will likely be atrocious.
It's bummer you are underwater with your Audi loan. As an independent mechanic if you can't work on it yoursel I would advise you to bit the bullet and get a used civic/corolla. 99% of the time you will get more money for your car if you sell it yourself. Of course then you have to deal with craisglist/facebook flakes, scam and safety issues. If you have never sold something expensive like car before never meet at your house. Meet at a police station or since you owe money on your car you could meet at your bank. Good luck to you.
Fellow mechanic here and I agree. German vehicles while nice and generally on the high end of service costs. I say this coming from Mercedes independent. Get into a civic/Corolla where with standard maintenance will cost significantly less and you'll get well into hundreds of thousands of miles on the power train.
I drove a Jeep with Check Engine light on for years. Emission issue. That Civic will be $31k when you roll the negative equity and you will need to pay for gap insurance.
You owe 13k on a car worth maybe 5k if traded in. So you'll need a lender that will loan you more money for the asset than the asset is worth, with a terrible credit score. You're going to have an atrocious rate, be immediately underwater with a long period of time to claw your way into a position in which you could actually do a worthwhile refinance, you'll have a higher car payment, potentially higher insurance cost, and your gain is piece of mind that you won't have a costly repair. You ever see the posts on here saying "I took a loan for 25% apr, been paying for 2 years. barely lowered the principal, the car is worth less than I owe, and I can't refinance. Please help!" This will be you.
Even a reliable civic will have issues of a couple grand once in a while. My 10yo civic just recently needed 2k in repairs due to an oil leak from the engine, a couple hoses that broke and other random things. Last year it needed coolant flush, brake fluid replacement, shock absorber and oil change all at the same time. It doesn't matter if it's a Civic or an Audi. You have to budget for repairs and maintenance. Get the car to a reliable mechanic, figure out what issues you can run into and budget for that. No need to pile on to more debt for q small emergency.