Should I trade in an expensive car with negative equity for a cheaper one to lower my payments?

I have a 2006 Dodge Charger R/T that I owe about $30,000 on. It%26#039;s now worth $20,000. I pay about $690 a month for the car and I%26#039;m a few months into a refinanced five year loan. I was looking at trading the Charger in for a $17,000 Toyota Corolla and rolling the negative equity into the new loan. My payments would be about $510 on a 6-year loan with a total finance of $27,000. The Charger gets 20 mpg at best and costs $1500 a year to insure. A Toyota Corolla gets nearly 40 mpg and would cost less to insure. Plus the Charger attracts police and traffic tickets because of its appearance. However, I would be trading in a top-of-the-line car with all the options in for a very basic commuter car. The question is, %26quot;Is it worth the trade?

Should I trade in an expensive car with negative equity for a cheaper one to lower my payments?

i think you should be able to answer this question yourself. you just have to first work out your priorities. eg. are you trying to save more money for your family, for an investment opportunity, or for another material possession...etc etc.

think about them (eg. cool car, family well-being, financial stability, new toy...etc) and list them in order or priority. your answer should be in that list :O)

of course the move will need to be financial sound in the first place... considering your outstanding amount on the Charger. your loan agent should be able to advise you on that.

Should I trade in an expensive car with negative equity for a cheaper one to lower my payments?

Why would you want to be in 27K in debt for a corolla?

Should I trade in an expensive car with negative equity for a cheaper one to lower my payments?

Personally I say NO...I have done this before and you still will be upside down in the Corolla...which means you will have to pay for 4 years before you are right side up in the loan.

What winds up happening is you will want to trade in the Corolla in a few years and you will still be upside down but the trade in value for a Corolla is much much less than a Charger, so you will be even more upside down than you were before.

It is a difficult decision to make, but consider this, by financing the negative equity into the Corolla you will be DOUBLING the cost of the Corolla...even with the savings in insurance and gas over 5 years will not be $13k.

Good Luck :)

Should I trade in an expensive car with negative equity for a cheaper one to lower my payments?

You should seek out a loan from a credit union etc for the difference of what you owe versus what you can SELL IT YOURSELF for. Then you should get a beater, something cheap (preferably pay cash). Once you have this, take the amount you would have in a car payment and save it until you have enough to get a $5,000 used corolla, then repeat and save until you can get a $10,000 car etc. Otherwise you are going to be under debt your whole life and be paying $40,000 for a new corolla, instead of paying cash for a year or two old camry that is better for $10,000