Trade in/new car advice (non taco related)

Never been in this situation myself but I'm trying to help my girl get out of her 06 Rav4 with 130k miles and a $10k bank note. Went online and got a couple trade in estimates around $6-7k. Trying to accomplish a few things here: erase negative equity moving forward, lower car payment (current was financed over 6 years ugh), and get better mpg and lower maintenance costs (the rav4 has had a lot of problems). She also drives about 20k miles/year so leasing is not an option.

I'm not into any domestics so I've already cut her options down to corolla, honda fit or civic or possibly a sentra (only b/c we get a company discount). I guess my questions is do you guys have any tips? I'm looking to get as much cash back as possible to try and erase the negative equity, trying to find 2013 model year closeout deals and also trying to take our time because there is nothing wrong with her current car but its gonna start depreciating rapidly soon. Any thoughts would be appreciated

 

If you have a $10k bank note and the vehicle is only worth $6-7k, how are you expecting to get cash back? It's a numbers game, any money you get back will just be financed in the new vehicle purchase. You're not actually getting anything back, you're just increasing the sale price of the new car. At best, you can hope to get a loan with a better interest rate because the negative equity you have in the Rav4 will just be rolled into the new loan. If you can sell the Rav4 privately, you might be able to eek some more money out of it but that could take some more time and you'd have to have your Rav4 sold and a new vehicle purchased at the same time or possibly overlapped as I'm assuming you can't afford to be without a vehicle.

Out of the cars you mentioned, I'd get one of the Honda's (Civic if it were me). They're just all around good, reliable cars.

 

Best bet is to sell the Rav4 as a private sale; you might even get close to the $10,000 she owes on it.

 

Since there's more to the story that we don't know and can't account for, if she's upside down on the Rav-4, why would you convince her to buy a new car? A couple things stick out. If the Rav-4 is problematic, either she got a lemon, or she didn't take care of the Car. I assure you onless her car needs a new transmission or engine, it would be cheaper to fix the issues with the car she has now then buying new since she is so upside down on it. Think of it like this, will the cost to fix her car cost more than $4000 since that is what she is under by? If she buys a new car, she will be upside down on that as well when the negative equity is rolled into the new car loan. Also if the Rav-4 is in as bad of shape as you say, do you think a dealer is going to give you a good trade in?

If you really want to help your girl firend out, you're best off by helping her fix the issues with her Rav-4 and encourage her to pay more money towards her current loan and get right side up on her loan.

 

Second the private sale. Dealership offered $13,000 on my Wrangler trade in, sold privately for $18,000

 

Upside down is upside down, no matter which vehicle it's on.