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

snakeweasel

I am gong to agree with everyone else, don't roll over negative equity into another car. You don't get out of a hole by digging deeper.

If you absolutely have to get rid of a car that you have negative equity then the next best advice is to bite the bullet and get the least expensive new car you can. That way you minimize how deep you can dig yourself. Then keep that car until two years after you pay it off saving those monthly payments for a nice down payment.

Kirstie_H

The only problem with your Plan B is that, on a cheap new car, he's not going to be able to roll over that much negative equity.

Like everyone else, I'm going to advise you to pay down that Trailblazer as quickly as possible, even if it means eating frozen pizzas for a year.

snakeweasel

The only problem with your Plan B is that, on a cheap new car, he's not going to be able to roll over that much negative equity.

Granted, but I wasn't thinking in the lines of a $9k Aveo SV, more like the least expensive he can make the deal work. That means not the Acura either.

Best bet by far is to stick with the TB as long as he can. That would be less expensive in the short and long run.

even if it means eating frozen pizzas for a year.

I would advise to cook them first. :P

qbrozen

Granted, but I wasn't thinking in the lines of a $9k Aveo SV

But, to the host's point, its impossible to bury $11k negative equity into a $9k car. Not to mention, would you REALLY want to be paying off a $20k note on a $9k car? I know I wouldn't.

kyfdx

Not much different than paying $15K note on the $5K car that he has now...

I agree...Keep the TB, and put everything you have into paying that note down... That will get you out of trouble more quickly than any other alternative.

qbrozen

well, that's a bed the poster already made when he rolled a boatload of negative equity into the TB. Why do it again?

Besides, personally, regardless of value, I'd rather be upside-down in a TB than an Aveo.

kyfdx

I agree... no point in adding to the amount owed... Just pay down what you have, as quickly as you can.. If you can afford to roll over $11K and still swallow that big payment, then prove it now, by paying off your current loan in a year...

Then, you'll really be in great shape..

sebring95

The $5k value is a bit suspect as well. Maybe that's what a dealer offered him (he could have offered $2.00 as easily), but you've got to work to get this thing down to being only worth $5k on a book trade value (bad condition, no options, etc.). A private sale would surely bring more.

snakeweasel

I know thats why I joined in the chorus of "keep the TB".

mookie14

I just might as well keep it like you guys say huh? Well everyone has opinions and frankly i like mine. I do know one thing i really do appreciate all the info you guys gave i will take in consideration when i get a new vehicle thanks guys.

qbrozen

good luck. you'll need it.

div2

I do know one thing i really do appreciate all the info you guys gave i will take in consideration when i get a new vehicle thanks guys.

No problem, please let us know the next time you "need" to trade up...

oregonboy

Quote for the day: "A fool can learn from his own mistakes. A wise man learns from the mistakes of others."

Of course there are those that don't learn at all. Ah well.

james

blueiedgod

We are currently paying to "own" a 2003 Chevy TBlazer with about 25 monthly payments left of about $650. Extended warranty will end in July '07. Since we no longer want to "own" this vehicle and continue to put hard earned money into a vehicle that is obviously unreliable.

Our plan is to add $200 over our regular payment to reduce the debt we owe. Expected to have about $3k for down payment on the Acura TL. As of right now, I think the '03 TBlazer with 90k miles is only worth $5k.

Does anyone have a really rough idea what the payment will be when it comes time in October 2007? Our credit is good, so no issues there. With online companies like e-Loan, People First, is it possible they would do a deal like this?

Thanks for any input!

$650x25 = $16,250
By paying $200 more per payment until paid off, you will be done 6 payments earlier. $16,250/$800 = 19 payments.

By paying $850 for 12 months on a $650/month loan (without taking into account compounded interest) You will have reduced the loan by $2400. By this time next year you will owe about $6,500 on this Truck.

You might as well just ride it out and keep it.

qbrozen

I saw this post on craigslist and thought it might be our friend here. Now I see we were talking about a Tblazer, not a Denali.

Anyway, the person who posted this ad is just BEGGING to be taken for a ride by a savvy salesperson. Ugh!

fezo

Ouch! "please hurt me......"

lemko

$581 x 31 = $18,197. How does he/she get $39,000 for the payoff?

fezo

I do suppose this person is somewhat math challenged. Wonder how he got into such a predicament?

So which car salesman in here is going to help him out?.....

kyfdx

The payoff is to trade the car in...The only way to really get out of the lease is for a dealer to buy the car from the bank. Not to just payoff the remainder of the lease payments..

That is really the only way to get out of a lease.. With 31 payments to go, the bank won't accept the remainder of the lease payments and take the vehicle back..

fezo

That makes sense to a degree in that I know banks hate being in the selling cars business, but wouldn't you think there would be something to be said for them to accept $18,197 for a $39K truck? I would have to think there's a buck to be made there. There is the remote possibility that I could be wrong.....

kyfdx

You'd think so... but, they have a contract... and you have to abide by it...

Three ways out of a lease..

1) You buy the car for the payoff.. This is generally the Cap Cost minus the depreciation portion of the payments already made, plus occasionally a penalty portion of the unpaid finance charges.

2) A dealer buys the car for the payoff (through trade-in usually). If the trade-in value is less than the payoff, which it almost always is, the lessee will have negative equity that has to be dealt with, just as in any other negative equity trade-in situation.

3) Get someone to assume the lease. Not all banks will allow this.. If you are in a bad lease, this is almost impossible to do, but if your lease payment is cheap, and you just don't want it any more, this is a viable alternative.

regards,
kyfdx

lemko

...is one awful monthly payment for a lease! I paid much lower monthly payment than that to BUY a new Cadillac, (No, I didn't finance it for 60+ months!)

british_rover

haha

Our average Range Rover lease is around 1,200 a month for just 15,000 miles a year.

fezo

Explains why I don't have a Range Rover!

"2) A dealer buys the car for the payoff (through trade-in usually). If the trade-in value is less than the payoff, which it almost always is, the lessee will have negative equity that has to be dealt with, just as in any other negative equity trade-in situation."

And that, in a nutshell, is why I never have and never will lease a car!

I have a friend who does almost a lease it to himself deal, which is to say that he buys the car when the old one hits 50K. He trades in or sells the old one and throws a couple of thousand into the pot. In the end he has a car loan that approximates a lease payment and a capital investment in the car. A depreciating asset to be sure, but he has equity in it that you'd never have in a lease.

I'm thinking of buying his next outcast. The last several have been Subaru Outback wagons and he takes fanatical care of everything he owns. I could live with that. He sold the last one to a friend as well.

hyundai_slsmn

I have rolled as much $13k into Hyundai Elantra's before. When the car only cost $11k. How does that work? It's called having flawless credit and taking an 84 month term. There are banks out there that will loan close to 200% of invoice.

Trading out of a car to lower a payment is about the dumbest thing anyone can do. First off chances are you owe more than the car is worth so you will have to roll negative which will bump the payment more and then how much are you going to lower it $50, $100 big deal. Why roll money and start over brand new payments just to drop it a few bucks.

If your payoff is low and you really cant afford the payment look at refinancing the balance to something you can afford. You may pay on it longer but its a lot better than putting negative money ontop of a loan on a depreciating commodity

jlawrence01

and taking an 84 month term

84 months on an Elantra ... OUCH!!

kyfdx

84 months and $24K... double ouch!!

Seriously... Can you imagine still making a $450 payment on a 6-yr-old Hyundai?

div2

84 months and $24K... double ouch!!

I doubt that I could endure owning an Elantra for 84 minutes... :P

jlawrence01

Seriously... Can you imagine still making a $450 payment on a 6-yr-old Hyundai?

Can't imagine making a $450 car payment, period.

I was cleaning out my desk last month and located the only two car notes I ever signed - $128 and $132/ month .... loans at 17% and 12% APR. OUCH!

kyfdx

Funny... My first new car note was for 48 months at $109.33/mo... No idea what the rate was... January '77.. I'm guessing it was pretty high...

hyundai_slsmn

it was around $460 or so but actually coming down from $580 on the previous vehicle OUCH

It's surprising and alarming how many 78+ mo notes I've written. What's even more sad is the person who is so compulsive as to go that long on a car loan just to make it affordable would never even come close to keeping it that long.

I think if i ever got out of the car business I could go into personal financial planning.

Kirstie_H

Man, you guys are older than dirt My first car payment (that I remember, anyway) was $180/month on a '96 Protege. I owned other cars before that, but none of them were nice enough to warrant financing (e.g., a Saab 900 purchased for $2500).

lemko

I can't imagine even making $450 payments on A Hyundai!

lemko

I can top that - December 1987 - car payments on a new black 1987 Chevrolet Caprice Classic - $147.16 for 24 months! I pretty much paid for most of the car up front. Good God, too bad I can't finance a nice car like that at those terms today!

kyfdx

Yeah.. but, when I bought my car for $109.33/mo., I was only making $2.30/hr..

Top that!!

ray80

'Man, you guys are older than dirt Hey, I could take that personally (although it might be true . My first car was financed ($500 dollar car) and whatever the payment was it hurt as I was only making $2.10 an hour at the time.

Kirstie_H

That comment was really meant for kyfdx, who seems to have conveniently (and probably wisely) ignored it.

$500? For how long did you finance?

ray80

Was a long time ago, most likely a year or so, couldn't wait to get rid of it

jlawrence01

Man, you guys are older than dirt

I just assumed that you were talking to me. (g)

qbrozen

Geesh! you guys ARE older than dirt!

My first car payment EVER was on a new '97 Dodge Dakota. ~$350/mo. I've never had a payment lower than that since.

For reference, my highest was my wife's Pilot at $525.

w9cw

div2 wrote: "I doubt that I could endure owning an Elantra for 84 minutes..."

Funny, since I sold a Civic, and bought a 2006 Elantra (paid cash), and am happy that I did. The Elantra is a much better car than the previous generation Civic. When you've owned both as my wife and I have, you'll know what I mean.

Hyundai, unfortunately, is still the laughing stock with some uninformed consumers, just as Honda and Toyota were back in the '60s and '70s. I remember when I bought my first Honda - a 600 coupe in 1972; people thought I was crazy, and laughed every time I drove the car. They're not laughing at Honda now, and those who make fun of Hyundai, will also not be laughing.

Like Mikey was told (paraphrasing of course): "Drive one, you might like it!"

mustangfan23

Hyundai is trying to improve their image....yet, it will still be awhile before any significant changes will come about. Their long warranty is nice, much needed so I hear...

One other thing--never ever finance a car for 84 months!! You are just asking for negative equity. Try to set it up for 60 months and pay if off early, if possible. The main thing is to get what you can afford in the first place and don't over-pay!

farout

kyfdx: My first New car was a 1964 Chevy 2. Paid $2,872. My payments were $82.50 a month. I was making $600. a month. My next New car was a 1966 VW bug with pop out windows, Tax Lic., and out the door was $1,840. and I had an actual oil filter and hele coils put in so the heads did not pop. I traded it off every 50,000 miles. They were cheap and fun. My last bug was 1971 bug and it was $27??. I can't remember the exact amount. Bare in mind car prices have kept pace with houses, food and other basic staples. But, wages have gone down hill from 1985. My son in law thinks $15. an hour is pretty good. I made $16. an hour in the Carpenters Union in 1983. To compensate banks have made loans longer to keep the ecomony strong and cars for the working affordable.

Farout

explorerx4

my dad bought a '74 bug with a sticker of 2200(i think).
it had a radio, which may or not have been optional.
the same dealer had porsches in the showroom. i remember seeing a 911 that had a sticker of 14,100, but did not have a radio. i was shocked(and obviously naive).
i had quite a few adventures in that car, along with others.
reminds me that i need to be more patient with my own kids.
thanks for the post.

div2

Hyundai, unfortunately, is still the laughing stock with some uninformed consumers, just as Honda and Toyota were back in the '60s and '70s.

Just to clarify, I'm not biased against Hyundai- I've even recommended them to my non-enthusiast friends. I couldn't endure owning any vanilla FWD sedan- Civic, Elantra, Camry, Lancer(EVO excluded of course), Fusion, G6, or whatever. Fact is, the Cooper S JCW is about the only FWD car I would consider owning.

When you've owned both[Civic and Elantra] as my wife and I have, you'll know what I mean.

I'll have take your word for it. The reason being, as Peter DeLorenzo would say, is because that is simply notgonnahappen.com... :P

sebring95

Everybody can badmouth VW all they want, but my best vehicle investment to date was a '77 bug convertible my wife just HAD to have (i argued). I never liked them but paid somewhere in the $3,000 range IIRC for a white over white model. Sold it in 1996 for $14,500. Now if I would have listened to my father in 1971 (a dodge/plymouth salesman at the time) and bought that Plymouth Superbird for $1500 that they couldn't get rid of......but that kind of cash was pretty tight back then for something I though was hideous to look at.

FWIW, with the exception of leasing some vehicles for business/tax purposes I've never made vehicle payments. Probably lucky I guess because it seems like once you start financing something (particularly when younger) you're stuck making payments for life.

wlbrown9

My real fear on this would be someone running into you and totaling it out. Unless you find a way to collect quite a bit in pain & suffering or whatever, the insurance company will cut you a check for the $9K or so it is worth and then the bank will want the balance to close out the loan. So, if you owe $18K for example and get $9K insurance payout, guess who has to try and come up with the other $9K. Plus, if you need a vehicle to replace the totaled one, you need to come up with even more cash for a little down, etc. Looks like the fast lane to bankruptcy if you ask me.

alteredwithin

Alright so my story. I bought a 05 Honda Accord. My parents came into some money problems so I traded it in for an 03 Nissan Maxima dropping my payments 150 a month. But now I have Negative Equity and owe almost 8k more than what the car is worth... I want to just go get another car loan and stop making payments the Nissan. Will they just repo the Nissan? Not quite sure what will happen since I owe more than what it is worth.

corvette

Yes, they will repo the Nissan if you stop making payments. Then, the bank will obtain a judgment against you for the difference between its value and what you owe. If you have any assets, they will attach those to get reimbursement. If you are on an employer's payroll, they will garnish your wages to obtain payment.

Why do you want to get another car loan if you can't pay the one you have?

stickguy

an '03 Maxima is still a fairly new car, and if maintained, will last a long time. So, your best bet (unless you have 8K lying around to pay it off), is to just keep it, and make the payments until you own it. If you do manage to trade it in, the neg eq. isn't going to go away, it will just somehow follow you to the new car, and probably get even bigger.