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Tips on Buying Cars/Upgrading a new car with negative equity


Hi Roger,
I own a 2011 Rav 4 limited with about 14k miles on it.  When we made the purchase it was primarily my wife's choice, but now long story short, I'm the primary driver of the vehicle.  While it is a fantastic vehicle, it's not for me and I want to get rid of it.  Problem is I rolled negative equity into it from our last car that died and now I owe $26k on it. I' m looking at moving into a higher end SUV like a Volvo XC60 or Audi Q5 but I'm torn between leasing, buying new or buying used. I'm thinking the lease would be good to "bite the bullet" now and pay a higher monthly payment so that I would be free and clear in 2-3 years.  If I bought new or used we would plan on keeping the vehicle for 7-8 years. Any suggestions on leasing vs buying new vs buying used for my situation?  I'm already pre-approved through my credit union at 1.99% so if I do buy I have a good rate to finance at.  Any advise would be greatly appreciated!

RAV 4  

Hey Mark,

The short answer is sell your RAV 4 yourself ...if it's a 4x4 then you aren't as backwards as you might think. That would be the smartest way to do it. If you aren't inclined to do that and want to trade just know that you will be leaving several 1,000 dollars on the table.

If you are still set on trading it in then if you bought anything except the Audi then you will be making a big mistake. The Volvo SUV's are nothing but trouble ...and they are very expensive to have work done on. Since yours will be new or almost new and you have to have it then make sure you don't own one for one second outside of it's factory warranty. The Audi Q5 and Q7 are both incredible vehicles that are really really fun to drive ...and they look disgustingly good.

Buy or lease?

If you have 1.99% money then definitely buy...your 72 month payment will be the same as a short term lease (or more likely less) Since you should buy vs lease in your circumstances then the decision of whether to buy new or pre-owned comes into play and the advice i would give to my own mother is to NEVER BUY NEW.

You can buy 2013's right now with under 10k miles on them all day long. If that's the way you decide to go then just know that you will have a much better ability to negotiate the price down than you think. You will want to send me an email and a link to the car you are considering and i will tell you what the car has just sold for in your market (within the last 90 days) and what a good price to pay would be. I would encourage you to look at the certified pre-owned cars ...those will usually come with a better warranty than a new car and will look and drive like brand new.

My email address is can get to me alot faster there. In the mean time please feel free to ask me as many follow ups as you want so that when you get a survey sent to you from allexperts you will be happy to give me those perfect 10's.

I have attached a book sheet (best as I could tell from your email just add and subtract options that it may have or may not have)so you can get a feel for where you ate at on your trade.

Tips on Buying Cars

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Roger Alvey


I can answer any question about the car buying process. I am a recognized industry expert on all issues regarding auto finance, including sub prime and buy here pay here financing, I can answer questions about car lock out systems, GPS monitoring by your bank, and about auto recovery methods and defenses. I am a 20 yr car industry expert and can tell you what to look for in a used car, how to negotiate the deal, help with how to market your own car, and how to negotiate with the internet department of any car store. I can tell you every single way the dealer is set up to beat you and how to avoid those traps, I can discuss all aftermarket and extended service contract products you will be offered in the finance process, I have lectured extensively on "The Best Way to Buy a Car" to civic groups and university students. I am a credit expert and can tell you what the dealer and banks are looking for and the rate you can expect to pay. HERE IS THE LINK TO MY OTHER ALLEXPERTS CATEGORIES WHERE I HAVE ANSWERED LOTS OF QUESTIONS HERE IS A LINK TO MY BLOG


20 years industry experience in top management of dealerships and dealer groups. Recognized industry expert since 2004 in the Top 10 industry experts for The Gerson Lehrman Groups Auto Industry Council. I also do consulting work for Atheneum Partners, Expert 360, Expert Connect and Coleman Research. I have been a franchise owner and understand all facets of the auto industry from the time the car leaves the factory until it leaves the lot with it's new owner. I have written training materials for both the prime and the subprime sales and finance process.

NADA, OADA, NFIB, State Certified Used Car Appraiser

Special Finance Insider, Dealer, and Automotive News, Gerson Lehrman Group Auto Industry Council News (frequently)

Willamette University - Salem Oregon BA Economics Willamette University Graduate School of Business - Econometrics Statistics

Awards and Honors
GM's Award of (their most prestigious award) Given to Dealers who surpass their annual benchmark planning volume while also maintaining Top Box (top 5%) CSI

Past/Present Clients
Citadel Investment Group , Summit Partners US ,Broad Peak Investment Management, Nautic Partners, LLC, Hellman & Friedman Investors, L.P. and over 40 additional money managers, hedge funds and research groups

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