I owe $19,000 on my car but according to KBB its only worth $12,000 on the low end for a trade in. The car has about 120K miles on it and im worried it might break down and cost a lot to fix. I’d like to downgrade to a Honda that costs about $20K and has low miles and is reliable. I don’t know if a new or used car would be my best bet, but I was originally leaning toward a used one simply because I can get one with low miles that is a nicer model. I’m not sure if I’m better off getting a new car with a lower interest rate or a used car with a higher interest rate, even though San Diego Credit Union has some good interest rates on used cars.
In about 3 months I will have $7K cash that I theoretically could use to pay down my current car, but I’m not sure if thats the best thing to do with that money. Also, I can afford to pay more monthly on my current car, I can comfortably pay $1000/month towards it. I usually pay more then the minimum, but only about $50 or $100 more.
My goal is to lower my monthly payment, it’s currently $712 and am looking for something closer to $400/month.
My credit score is decent, its around 660. I’ve never been late on my auto payment for the past 3 years and I also pay all my bills on time. The only thing really hurting me is that I have two credit cards that have a high balances. One of them has a $3K limit and I owe $2800, the other has a $2500 limit and I owe $2100. Would that $7K be better off going towards this??
Given the information above, what do you think my best move is to get into a used or new car with low miles that is reliable while keeping my payments around $400/month?
The other reason I’m trying to lower my monthly payment is because my fiancee and I would like to buy a house in a year or so and I can really use that extra $300/month towards a mortgage instead of a car.
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