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Posted in Auto Loans
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Question By
Jakethesnake95

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Im upside down on my vehicle. How much will it hurt my credit if i trade mine in for something else?
Wanting to get something a little more expensive.

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This is a terrible idea, trading an upside down loan in for another loan is not going to correct the problem. Most lenders are not going to go for that anyway. Do whatever that you can to get the loan paid down so it is no longer underwater, then proceed from there. You are also better to sell a vehicle outright than trading it, when you trade you will get even less.

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TryingToUnderstand's advice is sound, but if you really want another vehicle, I will offer my two cents.  Being flipped on a vehicle shouldn't impact your credit any more than if you had equity.  Where the issue lies is how much you are upside down.  The amount of inequity matters for two main reasons. One, any amount of inequity will need to be rolled into the next vehicle.  Two, banks will only finance a certain amount based on loan to value of the vehicle you're considering.  Depending on your creditworthiness, some banks will finance up to 120% of the value of a vehicle.  That means if you're looking at a car worth $10000, they will finance up to $12000.  There are two ways to offset your inequity.  They are putting cash down or choosing a new car with plenty of rebates.  I hope this helps.

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