Negative Equity After A Buyback

[Ruben Anthony]

So I got my offer letter today for my buyback for my 2023 Mach-E Select. I traded in a 2019 Mustang with about $8,000 in negative equity and that negative equity will still be there after the buyback.

When I turn in the vehicle, do I have to provide a check/money order for the negative equity so Ford can complete the payoff, or can I just wait until I get a new car and rollover the remaining balance into a new loan?

I would hate to have to scrounge up $6,500 cash to complete the turn in when I have already been pre-approved for new car loan that will more than cover the remaining balance on my loan I have through Ford Finance.

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[Frankis843]

If you have the cash, it would probably be easiest to pay it and be done with it. It isn't going to be a trade in on the new transaction so rollover will be more challenging.

 

[Ruben Anthony]

If you have the cash, it would probably be easiest to pay it and be done with it. It isn't going to be a trade in on the new transaction so rollover will be more challenging.

The problem is I don't have that much cash on hand. What I want to know is when I show up to the dealer with the car to turn in and I don't have $6,500, will they turn me away until I come back with the money?

The vehicle is financed through Ford Finance. My expectation was to wait until Ford sends Ford Finance the check for the buyback, and when the balance goes down to $6,500, go to a dealership, buy a new car with my already approved car loan, and rollover the negative equity into the new loan.

 

[AliRafiee]

I’m pretty sure the dealer will be best place to get the answer.

 

[GreaseMonkey]

The problem is I don't have that much cash on hand. What I want to know is when I show up to the dealer with the car to turn in and I don't have $6,500, will they turn me away until I come back with the money?

The vehicle is financed through Ford Finance. My expectation was to wait until Ford sends Ford Finance the check for the buyback, and when the balance goes down to $6,500, go to a dealership, buy a new car with my already approved car loan, and rollover the negative equity into the new loan.

And who’s on the hook for the $6,500 during that time? What if you turn into a pumpkin? They need some kind of collateral and cash is the best kind.

 

[Ghost Ryder]

My guess is you're going to have to come up with the $6500.

 

[Ruben Anthony]

And who’s on the hook for the $6,500 during that time? What if you turn into a pumpkin? They need some kind of collateral and cash is the best kind.

I am, as I should be. I just want to roll it into a new car loan. But I can't get a new car loan until Ford pays off what they owe me in the buyback.

I just want to know if I'm expected to come up with the cash to cover the negative equity at the time of turn in.

 

[Neil4Real]

I am, as I should be. I just want to roll it into a new car loan. But I can't get a new car loan until Ford pays off what they owe me in the buyback.

I just want to know if I'm expected to come up with the cash to cover the negative equity at the time of turn in.

Yes, you’ll need to come up with the cash. There is no way to roll the negative equity from a buyback into a different loan, unless it was through Ford and they were willing to work with you. If you can’t come up with the cash, then you should seriously consider taking them up on a replacement car rather than a buyback.

 

[AKgrampy]

As mentioned you need to speak with the dealer. Logic seems like you would have to come up with the cash because how do they know you will refinance with them? You owe the $6,500 and they are not going to close out a deal without something firm in place. Reverse the role and would you do that?

 

[RickMachE]

Rolling over negative equity, twice? Yikes! Maybe you should buy a used car you can better afford.

 

[KevinS]

Rolling over negative equity, twice? Yikes! Maybe you should buy a used car you can better afford.

Seriously. This is the equivalent of paying off credit cards with other credit cards.

 

[fmtexmme]

Are you buying the new car through the same dealer? If so, are you completing the transaction for the new car at the same time as you are turning in the old one? If so, the dealer MIGHT be able to treat it as a trade in and roll the negative equity into the new loan. Otherwise, I don't see how you avoid having to pay the negative equity at the time you turn in the old vehicle.

My advice is to pay off the negative equity when you turn the old car in. As it is, you'll probably end up in a negative equity situation with the new car (I assume you're not putting much down on it) and rolling the existing negative equity will only make it worse. There is an old saying when you find yourself in a hole, stop digging.

 

[Ruben Anthony]

What is the whole story? Why is Ford buying back your MME? Is it not repairable under warranty? What new car are you buying? If you are financially strapped to the point you can't come up with $6,500 to pay off the negative equity from the '19 Mustang that you traded in on the MME, you might as well bite the bullet here and keep the MME for the long term.

And not trying to pile on, but you need to seek the advice of a financial advisor. No offense meant, but rolling over negative equity from one car to another is one of the worst financial situations to get yourself into. You're going to have to bite the bullet at some point. If you can qualify for a car loan and don't want the MME, my advice now is by the least costly car you can, like a pre-owned Corolla or Sonata from the Ford dealer you have the MME with, roll the equity into that loan and take a few years to pay everything off and not get into the same situation again. I'd hate to know what interest rate the loan company is charging you.

Good luck.

Honestly, in the past I've always stayed ahead of depreciation and it was never an issue. But last year when used car prices plummeted after going up the 2019 Mustang got away from me.

I didn't want a car with 100,000 miles (I drive about 35,000 miles a year) so I traded it in for a brand new 2023 Mach-E Select with plans on closing the gap over three years.

I did not expect the HVBJB to go bad on me in the first two weeks. Or the replacement to go bad. Or the second replacement to malfunction.

I'm pretty good with money. I just suck at marriage. I had my car paid off, no credit card debt, and $90,000 grand in the bank when I met my ex-wife.

Now I'm still paying off leftover credit card debt and have a car payment after my divorce. But hey, I kept my house. But I'm not refinancing my mortgage anytime soon. I can probably come up with the cash, I'd just rather roll it over into a new car loan.

 

[Monke]

You have to do what you can. Talking to dealer seems to be the best choice. I have been seeing credit card offers for balance transfers (cash to the card holder) for 5% fee and 0%-2% interest for over a year. The fee is high and I do not need it. I would check with the credit card company if I am in need of cash.

 

[jay1122]

Fair enough. When an ex-wife is involved, all bets are out the window . I used to drive 35,000/year just to commute to my office, so I get that part.

Not my business but EV really doesn't fit a 35,000/yearly commute, IMO. I tried for years to make it financially work (on paper) and couldn't, not even with a Model 3. I hope you are going back to ICEV. I hope you get the finance part worked out.

Why is EV not for 35K annual. The gas saving is great when you do that many miles. You don't need frequent oil change. The car is supposed to last a long time. As long as you have enough range for a single day. I think it is a great option. If you ask me, if you don't drive much. Don't bother with EV. Of course, hybrid camry is the best choice. But they are boring and slow.

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