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Owe more than it's worth... I'm upside down and I can't get up!

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  • fezofezo Posts: 9,410
    Yeah, but you wrecked the "What's the best vehicle for my needs" by buying a Camry. :P

    I mean we could tell everyone that the best vehicle for their needs would be a Camry and be right more often than we'd wrong. At least you could have done a Subaru....

    And you'll never be upside down either way.
  • dtownfbdtownfb Posts: 2,915
    "And you'll never be upside down either way"

    Which is one of the reasons why i bought the Camry. :)

    Subarus are nice but the back seat is too tight for my kids. The new Forester is out of my budget range for now. Also don't need full time AWD.
  • fezofezo Posts: 9,410
    I've been down that Subaru back seat path. Had it not been for that we would have bought a Legacy wagon in late 99 but the seats were just too small. Ended up in an Accord which sadly was not available in a wagon anymore at that point. I still have it.
  • blueiedgodblueiedgod Posts: 2,797
    Yes, we even would refer to it as a self managed lease. One reason he likes it better than leasing from the dealer is that if he hit a bad patch for any reason he has more control over the situation.

    I did the self managed lease back in my 20's. It worked great. I would buy a car at the model year end for a deep discount and then drive for 2-3 years and sell. Worked best with Hondas. My first one was also my first brand new car, bought a 1999 Civic in October of 99, right after the 2000's rolled onto dealer's floors. Paid $15,500 for it, sold it in 2001 for $12,000 ($3500 in depriciation over 36 months comes out to $97/month in self lease), did the same with 2001 CR-V, but it got stolen. Then got a 2002 Civic Si (it was heavily discounted from it's $19,800 MSRP) for $15,000, sold it in 2005 for $12,500. $2500 over 36 months worke dout to be $70/month).

    It is not bad if one does it with calculated approach.
  • dgs4dgs4 Posts: 66
    "Being "upside down" is not a problem if you wait until your car is paid off before buying another one. Never understood why people who must finance to afford a new car feel they "need" a new car every 3-4 years. All you are doing is putting yourself at the mercy of the dealers."

    I haven't read all 115 pages of this thread, heck, I only read the first page, but I found it interesting. The bit quoted above is something that has been a mystery to me too. Most people I know hate the car buying process (including myself) and are relieved when it's over. They keep their cars for a minimum of five years. It's only when I started researching my 2009 Honda Fit purchase on various car sites and reading message postings that I learned how often people trade cars. Leases were created for people who MUST have a new car every three years, but some people don't even stay in the lease that long! It's crazy. It's also crazy that any lending institution would finance negative equity. Why would any bank want to finance negative equity on a fast depreciating asset like a car? If I were a loan manager I would not take any loan application that had negative equity in it. That reeks of an irresponsible buyer and no one I would want to finance. Frugal, smart, responsible car shoppers don't role negative equity into a new car, period.

    Negative equity to me is part of the greater problem that has caused this current financial crisis, which is greed and excess. People buying more home, more car, and more credit than they could actually afford, and the incredibly lenient lending practices all conspired to create this huge problem. No one policed themselves and had the conversation, "Can I really afford this new luxury home? Do I really need that new car when my two year old car runs just fine? Do I really need a home equity loan to furnish my big luxury home I can't afford the mortgage on?" America, the land of excess, waste, and greed. Sometimes I'm not proud to be an American...
  • cdnpinheadcdnpinhead Forest Lakes, AZPosts: 3,306
    Frugal, smart, responsible car shoppers don't role (sic) negative equity into a new car, period.

    I can be just as self-righteous as the next person in this conversation (I don't own a Pious yet though, so I've got room to grow), but I've got to think that the reason this thread has gone basically dead is that upside-down financing isn't offered so much anymore and/or people have decided they can hang on to their present cars for awhile longer than they might have two years ago.

    Like you, I didn't realize there was such a thing as upside-down financing until a few years ago. Since an auto loan is supposed to be secured by the value of the vehicle, it seemed a pretty dangerous practice to me. It was done all the time though, maybe most of the time, until a year or so ago.

    Maybe it still is -- I don't know, but I doubt it.
  • shiposhipo Posts: 9,152
    There are times when rolling negative equity into a new car is appropriate or desirable. Speaking strictly for myself, I won't do such a deal as a general rule, however, back during the summer of 1993, I leased a new Ford Probe GT 5-Speed only to find out not twenty-four hours later that my wife and I were expecting our first child (to say we were shocked is an understatement). Eighteen months later when our son graduated from an infant seat to the smallest forward facing booster seat we could find, it became painfully obvious that he wasn't going to fit back there for even a month or two and the search for a new car began. In the end, I wound up rolling the remaining portion of the lease into a new 1995 VW Passat GLX 5-Speed.

    This turned out to be an even better deal for me than it might have as I ended up driving the Passat well over 100,000 miles during the term of the four year lease. "A good deal?" some might ask, "What about the charges for the excess mileage?"

    I paid no excess mileage charges. Why? Apparently the 1995-1997 Passats had a problem with the instrument cluster where it would gradually burn out and lose all memory of the miles driven. When I turned my Passat in at lease end, there were only eighteen miles displayed on the new instrument cluster (the third since the car was new), and the VW service records only recorded enough miles to add up to something like 50,000 miles.

    Best regards,
    Shipo
  • Kirstie_HKirstie_H Posts: 10,914
    Ha! You're the first person I've heard of who's actually benefitted from the widespread electrical issues associated with VWs.

    I wonder whether consumers are getting smarter, and realizing that being upside-down is rarely in their best interest? It'd be nice to find out that that's the case, rather than finance companies saying "no." Dealers?

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  • shiposhipo Posts: 9,152
    Funny thing, I actually gave VW a chance to do it right.

    When the instrument cluster was in the process of failing for the second time, but before the odometer was completely unreadable, I took the car in and requested another new cluster. They said, "No" without even a second thought. I countered with my assertion that the instrument clusters were a "known issue" and since it had already been replaced under warranty it should be replaced again. They laughed in my face and told me that they wanted something like $1,200 for the parts and the work.

    I turned to a local shop that specialized in VWs and had the job done for $500 (including the purchase of the new cluster). When VWoA called me after the car had been turned in and asked me to "estimate" how many miles were on the car, I stuck to my guns and asked, "What do your service records show?" In the end, my final lease disposition paperwork showed eighteen miles on the car at turn-in. I have no idea why they didn't add the initial (documented) seventeen thousand miles from the first cluster to the thirty some thousand miles that were on the second cluster during the cars' last visit to a VW service department, but they didn't and that was okay by me. ;)

    Best regards,
    Shipo
  • volvomaxvolvomax Posts: 5,274
    Why would any bank want to finance negative equity on a fast depreciating asset like a car? If I were a loan manager I would not take any loan application that had negative equity in it.

    The short answer is that NO deal is sent to a bank with negative equity showing.
    the numbers are massaged to show either a neutral trade or trade equity.
    One of the reasons why trade in values here and places like KBB are off.
    the selling price of the new car is raised.
    The problem now is that banks aren't doing 100% financing for the most part. They won't do 100 or 120% of MSRP or retail book anymore, so hiding neg equity is much harder.
  • Chase won't even finance 100% of invoice on a new Saab anymore and they won't finance longer then 60 months.

    I think the max they will do is 70% of invoice.
  • volvomaxvolvomax Posts: 5,274
    Yikes!
    $ucks to be a SAAB dealer.
  • grandtotalgrandtotal Posts: 1,207
    Is that because Saab is 'going away'?
  • I know :sick:

    Back a few years ago if we did 40 Volvos a month then we did 30 SAABs. We can still hit 15 or even 20 Volvos on a good month but only get four or five SAABs.

    We did do eight SAABs last month were probably number one SAAB dealer in the country too. We don't know though cause GM canned our rep back about a month ago and we didn't get a new one until just last week. Didn't even tell us they fired him just noticed one day that we never got emails from him anymore.
  • roadburnerroadburner Posts: 6,767
    My wife has always wanted a SAAB and I'm willing to give them a look now that they are no longer part of An Amerikan Revolution- AKA Government Motors... :D

    2009 328i / 2004 X3 2.5/ 1995 318ti Club Sport/ 1975 2002A/ 2007 Mazdaspeed 3/ 1999 Wrangler/ 1996 Speed Triple Challenge Cup Replica

  • Just joined. Female needing advice. I've had numerous problems with a 2005 Nissian Altima I bought less than a year ago. After several rounds with the dealer, he has agreed to get me out of the Nissian and offered me a Prius. After my ordeal with the Nissian, I'm trying to be extra careful. What should I do? How should I approach this? What should I be on the lookout for with the dealer? My Nissian is upside down. Should the dealer pay off the Nissian completely? Should I take the Prius or look for something else? Should the dealer declare the Altima a "lemon"? I know lots of questions. But don't want to make the same mistake again, and need help/advice.

    WHAT KIND OF QUESTIONS SHOULD I ASK THE DEALER WHEN I MEET WIT HIM?

    Please Advise.
    Thank you,
    Beingcareful
  • corvettecorvette United StatesPosts: 4,196
    I think that when they talk about getting you out of the Nissan, they're really talking about you trading it in and rolling the negative equity into the new car. You need to take a look at the trade-in value of the Nissan, as well as the average selling price of the Prius (according to Edmunds) to make sure you won't be rolling negative equity into the new vehicle.
  • sebring95sebring95 Posts: 3,233
    First off, the dealer can't just declare the vehicle a lemon. They can have compassion on you if they're truly good business people and have sold you a hunk of junk....but no such thing as lemon law on a 5 year old vehicle.

    As corvette mentioned, you need to know what trade-in value they're giving you on the Nissan, what your payoff is, and how much they're charging for this Prius. Is the Prius something YOU want or is that something they offered up? I would think if they're truly going to work with you, they would do so on any vehicle they have.
  • stickguystickguy Posts: 15,427
    well, the OP did mention neg equity, hence coming to this thread!

    I am guessing that the Prius is what the dealer has available that will allow them to hide the neg equity. Has to be something that the bank will loan more on than what they are selling it for, or have some serious rebate action (not hear since I assume it is used too?)

    Generally a losing proposition to keep rolling over your upside down, but at least you will same some of it back by getting better MPG!

    2015 Hyundai Sonata 2.4i Limited Tech (mine), 2013 Acura RDX (wife's) and 2007 Volvo S40 (daughters college car)

  • Thanks to all who responsed to my questions. I will meet with the dealer tomorrow. Taking someone with me. Will ask what else they have to offer. Will not be so quick to sign any papers. If I'm not comfortable with what he's offering, will try other avenues to get out of vehicle. I have all the figures for the Nissian - payoff; trade-in value. Have looked at prices of Prius. May need a good attorney. Know any attorney who would be willing to take this case?. I'm nervous, but won't be taken advantage of this time. If push comes to shove, will have the Nissian repaired on the dealer's dime. So far the warranty has covered none of the problems I've had to deal with. Had to fork over the money myself. But this latest problem is covered by the warranty - $100 deductible. Will let you know how it goes.

    Thank you,
    Beingcareful
  • fezofezo Posts: 9,410
    Take careful notes and if you aren't sure pause the process and post what's up in here.

    It couldn't hurt.
  • delthekingdeltheking Posts: 1,152
    Get the trade in value of the Altima.try a place like carmax for the trade value.you will have a price in writing.Then see what your trade of is.

    And if you decide to get another car ,get a used car rather than a new car as you will save the initial depreciation and save quite a bit.Also a Prius -new or used-tend to be high priced as it`s resale is excellent.try getting a 2 or 3 yr old-Hyundai Sonata/Kia Optima with less than 40 k miles--These are pretty relaible but depreciate horribly and they ghave the 5yr/60k warranty.
    Let us know the payoff amount and your Altima description-year,miles,trim level etc- and folks here can give a trade value. Hope this helps.
  • Thank you for your help.
    Payoff: $17,213.52
    Trade-In - Top Value - $14,725
    Trade-In - Middle Value - $10,725
    Trade-In - Lowest Value - $9,650.
    Mileage - 69,000
    Sun roof; leather seats; navigation system; anti-theft system; V-6; power seats; keyless entry; 6-changer CD player; 4-door; auto on/off lights; - it's loaded, just lots of problems. More than I care to deal with

    I meet with the dealer this afternoon. Would like to speak with you prior to my meeting with him. My name is Deborah and my cell # is 813-716-6252; office is 813-253-1057.
  • I WILL.

    Thank you.
  • euphoniumeuphonium Great Northwest, West of the Cascades.Posts: 3,341
    Since when does being upside down justify not satisfying the loan contract you read, understood, and agreed to when you signed the agreement.

    You are obligated to honor the terms and conditions of buying the money to purchase the vehicle so continue to honor that promissary note. That the vehicle is worth less than the balance owed is another issue.

    It is deceptive to go further in debt on another vehicle trying to wrap the negative balance into a new loan. A loan which will, down the road, end you up to be more upside down than you are now.

    Continue with your original transaction, pay it off, and learn from this experience.
  • tidestertidester Posts: 10,109
    Since when does being upside down justify not satisfying the loan contract you read, understood, and agreed to when you signed the agreement.

    Since when do ordinary loans not contain provisions for early pay off?

    It is deceptive to go further in debt on another vehicle trying to wrap the negative balance into a new loan.

    It may not be wise but there is no indication of deception. By your measure, loan consolidation would be deceitful. I don't think so. :)

    tidester, host
    SUVs and Smart Shopper
  • That is not what she is saying at all. Did you even read her posts at all or just jump in fire, ready, aim?

    She is having problems with the Altima, not exactly sure what kind of problems but problems that her warranty is not covering, and knows she is upside down but thinks it would be better to go into another car then deal with the problem car.

    She needs to go into a car with good book value like the prius to have any hope of covering the negative equity. I have done this dance with people a couple of times. Sometimes it works and sometimes it doesn't but if the car is truly problematic then it can be the best course of action. Used cars have no lemon law provision.
  • steine13steine13 Posts: 2,420
    I'm late to the party, so this may not be much help... but...

    The solution here, assuming a car is a necessity, is one of two things: Either fix the Altima and drive it a loooong time...

    ... or somehow come up with the negative equity -- bank of Dad comes to mind -- and buy a brand-new, lemon-law protected, totally boring and uncool Corolla or Civic for $15 to $17 and keep it forever, all the while making five or six years of new-car payments and paying off the $6 or $7 of neg. eq.

    What is totally beyond me is the idea of buying a 5-year-old Altima when one has enough credit to just buy a brand-new car one rung down the ladder. It's not like the Altima is some sort of status mobile.

    But that's in the past. For the future, I strongly recommend looking at one of the two solutions above. I'm not getting the warm fuzzys from the dealer you're talking to; anybody who sells a warranty that doesn't cover real-world problems is a sleazeball.

    Best of luck to you,
    -Mathias
  • I test-drove a Prius last night. Wanted to know in advance what the dealer was offering. Liked it. Appreciate all your comments/advice. Did not meet with dealer yesterday, 12/09. Meeting with him today, 12/10, @ 5pm. Will post the results of the meeting. If any of you pray, would appreciate it if you would pray that I have God's favor when meeting with the dealer. If you don't pray and/or don't believe in prayer, I respect your preference. So, please don't send me any negative comments. I believe in prayer.

    Again, thanks to all of you.
    Beingcareful
  • cdnpinheadcdnpinhead Forest Lakes, AZPosts: 3,306
    Good luck with your potential Pious purchase.

    Keep us posted.
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