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That the vehicle is worth less than the balance owed does not mean the owner should abandon the car, but understand he is obligated to a finanancial CONTRACT and fulfilling that contract is what is important & required.
That you are upside down is because of the method in which you chose to make the purchase in the first place.
In all contracts, be faithfull.
Taught me about how loans are structured as well as a valuable lesson on what a slightly used car is worth vs a new one. That's now coming up on 30 years ago but it's still fresh.
Well, she had a six year loan(unheard of in those days) AND it wasn't a simple interest loan AND of course they skinned her on the interest rate since she didn't have any credit history. Basically about the first 4 years of her payments did nothing but pay the interest on the loan. She is probably still driving that car.
So - the lesson - I always make sure that that my car loan is a simple interest loan. Even in the 80's I thought they were the norm, but trust no one, particularly when you're borrowing money from them!
Might as well keep it, if you do the math. And I am assuming you won't get 6K for it, and you will owe that 6K (and if it is a car lona, you have to come up with it when you sell the car.
Say you owe 6K, and can sell it for 4K. You have to come up with 2K out of pocket just to get back to even. Then, you have to take out a new loan for the next car.
Taking into account the 2K that wil ljust vaporize out of your bank account, what are you going to get for enough less in payments to make it worth while?
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
I had a '91 Jetta, and after that experience, I would never buy anything remotely associated with VW, be it VW it self, Audi, Porsche... they los this customer for life. I went back to Honda has ave not looked back.
Anyway, 'upside-down-ness' is one of the causes of the 'auto meltdown', hardly anyone can afford to trade in, and then the dealers complain? They are the ones adding all the 'profit makers' to the sales prices!
GASP!!!!!!!!!
A retailer is adding profit to the price. Those greedy bastards, I can't believe they are not selling them for what they paid and just break even on every sale.
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 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.
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.
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.
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...
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.
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
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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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
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.
I think the max they will do is 70% of invoice.
$ucks to be a SAAB dealer.
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.
Mine: 1995 318ti Club Sport; 2020 C43; 2021 Sahara 4xe 1996 Speed Triple Challenge Cup Replica Wife's: 2015 X1 xDrive28i Son's: 2009 328i; 2018 330i xDrive
WHAT KIND OF QUESTIONS SHOULD I ASK THE DEALER WHEN I MEET WIT HIM?
Please Advise.
Thank you,
Beingcareful
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.
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!
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
Thank you,
Beingcareful
It couldn't hurt.
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.
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.
Thank you.
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.
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
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.
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
Again, thanks to all of you.
Beingcareful
Keep us posted.
She hasn't posted back, since then. Is it safe to assume that God struck her down with a bolt of lightning for bothering him with such minute business as being $3,000 upside down on a car, when he has other business to take care of, such as:
universal healthcare, flooding, eathquakes, snow storms, hurricanes, wars, hunger and suffering in Africa, little children being exploited in sweat shops, missing cihldren, missing mothers, hikers in in Iran, Iran building nuclear weapons, suicide bombers, 4 trains sutck in the tunnel with over 1000 people.
And on top of it all making sure that Santa Clause delivers all the gift on time to all the deserving people.
Yeah, I don't really think God has time to deal with a 5 year old Nissan with problems. But, that is just my opinion.
Mine: 1995 318ti Club Sport; 2020 C43; 2021 Sahara 4xe 1996 Speed Triple Challenge Cup Replica Wife's: 2015 X1 xDrive28i Son's: 2009 328i; 2018 330i xDrive
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.