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

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Comments

  • grandtotalgrandtotal Member Posts: 1,207
    What you're missing is that Ranger wants to change.
  • rroyce10rroyce10 Member Posts: 9,332
    ........ Like Drift said, depending on the engine, options, miles, etc, you should be seeing "around" the $16/$17 range on a trade .. $21ish is Retail *asking* money for a 1 tonner with all the goobley gob - not trade-in money ....

                 I will let the others do the "real" math, but just based on current $$'s, it will take you about 90k and about 5 years just to break -even- .. the only problem is, the average buyer is trading vehicles about every 28 months.

                            Terry.
  • q45manq45man Member Posts: 416
    The minimal cost solution is to always buy a 3 year old vehicle and keep it 200,000 miles....rebuilding it along the way.
  • lemkolemko Member Posts: 15,261
    My friend was shopping for a new top-of-the-line Toyota Sienna minivan. The finance guy told him, if he wished, could finance the van for nothing down and $300 a month for...get this...FIFTEEN YEARS! I told him that he had to be pulling my leg. I've heard of financing for 5.5 years, 6 years, and even a ridiculous eight years.

    I don't care if the car is a Maybach 62, nobody should be able to finance a car for fifteen years!
  • kyfdxkyfdx Moderator Posts: 235,188
    FIFTY dollars down, FIFTY dollars a month...

    For FIFTY YEARS!!!!

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  • baby_armbaby_arm Member Posts: 1
    If you're looking to keep the car, try refinancing it for a lower rate or paying extra to principle. If you can afford the payments, try to reduce your term when you refi. Reducing your term & acquiring a lower APR will help you reduce your principle quicker.

    Every lender has limits on their maximum Loan to Value (LTV). For instance a lot of Credit Unions only finance 100% and give you a super low rate. Other company's like WFS Financial will take more risk & finance higher LTV's, but charge a slightly higher rate. It's up to you what fits best.
  • CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    A community member, robr2, was kind enough to post a link to this article in another discussion: Boston Globe - This car-buying trend could leave you upside down. Those of you who visit this discussion will find it very interesting.

    Car_man
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  • grandtotalgrandtotal Member Posts: 1,207
    ...but upside down, in the auto-financing business, means that immediately after purchase, and often for several years thereafter, the vehicle you are driving is worth thousands less than what you could get for it in a trade-in, because your loan agreement has allowed you to shirk payments on principal.

    Priceless.
  • driftracerdriftracer Member Posts: 2,448
    your loan agreement has allowed you to shirk payments on principal

    Yeah, it's the LOAN'S fault, or the BANK'S fault...
  • janzjanz Member Posts: 129
    They said "your loan agreement".

    Of course the buying individual has to enter into an AGREEMENT.
  • driftracerdriftracer Member Posts: 2,448
    it's not my fault, article writing style.

    This upside down epidemic has been going on for years - the main reason, of course, is two-fold - people are buying way more car than they can afford and there not setting themselves up for an equity position.

    Dealer publications say that the average down payment on a car, nation-wide, is $500 - that chump change doesn't do much when you're buried in your current car and you buy another car that depreciates like a rock, then you finance it for 72/84/96 months to make it affordable - knowing good and well you'll wnat to trade it in 2-3 years. STUPID with a captal S.

    The only way to overcome this cycle is to curtail your spending on other things for a while, like foregoing that new DVD player or plasma TV, in order to pay down your current loan and pay less interest. The goal is to pay the car off while it's still "tradeable" - under 100k, no major damage, good maintenance. That way, when you DO trade, it's like cash money, instead of a the typical handicap of digging yourself out of one car, only to be buried in another one.

    The final goal is like my uncle used to do - he wasn't rich, by any means, but he bought a new car every 2 years and paid cash for the difference between the new one and the trade. He started off in older used cars that he paid cash for, and over just a few years, worked his way into paying cash for new cars - buy NOT financing for a long time!!! And buy not buying the most expensive thing out there so you could impress your neighbors.

    Personally, I'm MUCH more impressed by someone who buys the Honda Civic they can afford and takes their family on a real getaway vacation every year, than the idiot with the new Benz and 20" rims who can't afford to take his kids to Mickey D's. And will never "own" a car until he's 60 - what danged shame.
  • lemkolemko Member Posts: 15,261
    ...I'm even more impressed with the guy who buys a new car he can afford and keeps the car in good condition for ten or fifteen years - long after its paid for.
  • driftracerdriftracer Member Posts: 2,448
    It's the desire to show your bling-bling and keep up with the Joneses that puts people in the hole. What people don't realize is that the Joneses are paying their Visa bills with their Mastercards, but they sure drive a nice ride and dress well!
  • qbrozenqbrozen Member Posts: 32,889
    why does it have to involvo your neighbors or your friends or your relatives? How about just being an enthusiast who gets great pleasure out of driving a car they enjoy? I'm not saying the people you are referring to don't exist, but not everyone who buys a nice car is doing so to impress someone.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • driftracerdriftracer Member Posts: 2,448
    having a fast car, like mine, is great, and I'm one of the most hard-core enthusiasts most people know. The thing is, I can afford it.

    I can't tell you the number of people I see in my job who buy Corvettes, Porsches, BMWs, etc, who realize they can't afford the car and still get their laundry cleaned, and cry wolf, trying to make a lemon law case out of a nuisance sound or a dash rattle.

    Buying a sports car that is more than you can afford, and putting little or no money down, getting unburied from one car only to get buried in the new one...is just like buying a Lexus LS430 because your neighbor has one - it's all the same, it's just that my first example (in my previous post) is much more common.
  • lemkolemko Member Posts: 15,261
    ...who buy high-end cars like Mercedes and BMW fail to realize that its one the to be able to buy the car and quite another to also maintain it. As a result, I see a lot of ratty-looking late model Bimmers and M-Bs.
  • driftracerdriftracer Member Posts: 2,448
    Lots of late model rides running around Philly with either bald Michelins or cheap Pep Boys' Futuras!

    But hey, they can say say "I own a Mercedes".
  • lemkolemko Member Posts: 15,261
    ...that people say, "If I win the lottery, I'm gonna buy a Ferrari or a Lamborghini!" Is that all you wanted - a car? When you factor in fuel, insurance, repairs and maintenance plus the price of the vehicle, you've pretty much burned through all your winnings.
  • driftracerdriftracer Member Posts: 2,448
    this week concerning my pending Mustang Cobra purchase. He said "You make good money, why not buy an x,y, or z?"

    First, $35,000 for a vehicle is a LOT for me. Can't see spending the money on a Porsche 911 unless I made 3 times what I make now.

    I also explained my lottery dream - it isn't a Lamborghini or a Ferrari - it's 15 hot rods, like the EVO, Z06, STi, etc, that I can drive every day and wouldn't eat me out of house and home.

    The luxury in that type of purchase is that I could drive a different one every day of the week, or section a couple only for competition use.

    Back to reality, the Cobra is a great deal because it costs $20,000 less than a Z06, and with about $1,000 in mods, can easily bump 500 hp.
  • lemkolemko Member Posts: 15,261
    I've seen an ad on television for a local Mitsubishi dealership claiming it was the "place of no credit check!" Then how do they determine a fair interest rate for each buyer and account for the risk of the deadbeats they're certain to encounter? Do people with great credit and bums get the same rate, (probably high)? They also said they offered $8,000 for your trade no matter what condition. Is this perhaps their new vehicles are priced $8K more than they ought to be to cover the deadbeats who come in, buy a car, and then default?
  • driftracerdriftracer Member Posts: 2,448
    their advertisements require a 17-minute quick talking legal disclaimer. They specialize in credit criminals....

    No credit check necessary because they'll sell you a $5,000 car with $4k down and 22% interest. Heck, I'd hold the loan on that!!
  • automan227automan227 Member Posts: 118
    Also, if you listen to the end of their ads, its $8k for your trade or your first two payments on your new car.

    I didn't hear that the first time around, and couldn't figure out why they would give $8k for a car like a 1987 Taurus, until I realized they wouldn't.

    AS
  • driftracerdriftracer Member Posts: 2,448
    I picked it up because I used to write car ads and their disclaimers - I have an old habit of listening to the quiet fast talk that magically makes the advertised "deal" happen.

    It says, like you said: "$8k for your trade or your first two payments on your new car."

    That's $8,000 OR your first two payments - that could be no payments for 90 days, which isn't a stretch if you've got decent credit, or they discount the car equal to two payments ($500-800, big whoopee).
  • black_tulipblack_tulip Member Posts: 435
    ...who buy high-end cars like Mercedes and BMW fail to realize that its one the to be able to buy the car and quite another to also maintain it.

    I find that odd since BMW/Merc/Audi all come with 4 yr/50K miles maintenance at no extra charge.
  • driftracerdriftracer Member Posts: 2,448
    if you buy a 3-4 year old vehicle and it's still worth $40-50, it can easily be more than you can afford, plus you're on your own on maintenance.
  • rroyce10rroyce10 Member Posts: 9,332
    ...... ** I find that odd since BMW/Merc/Audi all come with 4 yr/50K miles maintenance at no extra charge. **

                Odd ..? .. no extra charge .? .. there's nothing odd about it, Plus your paying for it in the price and definitely in the service dept ...

                              Terry.
  • driftracerdriftracer Member Posts: 2,448
    to our comments about people who buy expensive cars and are so strapped they can't do maintenance - black tulip wondered why the maintenance would be an issue when it's free...

    It IS free up to a point, but like I said, when someone buys a used ride, they usually don't get that factory free maintenance, and they start spending money on $1,000 a set for tires, $2k for struts, $800 for a tune-up....
  • lemkolemko Member Posts: 15,261
    ...that sell used high-end cars. Ironically, most of these lots are in poor to marginal neighborhoods. Nothing is more of a money pit than a used luxury car out of warranty. I've actually seen a Rolls-Royce on one lot. So many of these white elephants are sold to people who can ill afford to pay their rent or utilities.
  • fish8fish8 Member Posts: 2,282
    They may not be able to pay their rent, BUT they DO drive a luxury automobile. I also think it's funny to see a late 90's Lexus 400 with dents and bruises all over it...... along with the spare tire that is being used as a permanent replacement since they cannot afford to replace a tire/wheel.
  • driftracerdriftracer Member Posts: 2,448
    (technically) rolling a Lexus, baby!! Bling bling!!
  • lemkolemko Member Posts: 15,261
    ...there is the plague of "Buy-Here-Pay-Here" lots. Oh, that red 1994 Ford Probe is only $78 dollars a week! Excuse me, but who in their right mind is going to pay $312 to $390 a month, (depending on how many weeks in the month) at 18% to 22% interest for a ten-year old Ford? Miss a payment? Big Bubba takes your ride!
  • driftracerdriftracer Member Posts: 2,448
    "who in their right mind is going to pay"

    Lots and lots of people...I have a high school buddy with three BHPH lots in Clute and Lake Jackson, TX - he became a millionaire with no debt 11 years after starting the business.

    That was 7 years ago - he's worth 4.2 now.
  • eharri3eharri3 Member Posts: 640
    By my aunt's boyfriend, who travelled all the way to Florida for a used Jaguar XJ8. Then let it sit in our driveway for months. The reason he claimed: It is just unacceptable to own a jaguar and have it be seen parked outside of an apartment building. He could only be seen driving it once he owned a house. The truth: He couldn't afford to get the car registered.
  • black_tulipblack_tulip Member Posts: 435
    Driftracer & others:
    Thanks for the explanation.

    Incidentally, just the other day I saw a "buy here pay here" lot with a sign:
    "Small dealer with big heart"

    and then below it, "huge collection of late model repos"...

    I had a good laugh out of that one.
  • driftracerdriftracer Member Posts: 2,448
    like saying "we appreciate your business, but if you don't have that weekly payment to me by Saturday noon, you'll be walking at 12:30..."
  • rroyce10rroyce10 Member Posts: 9,332
    ....... I have a friend that has a real nice BHPH lot and he has this great sign over his desk that reads:

          "The best way to get on your feet - Is "not" to make a payment"

                           Terry :)
  • steine13steine13 Member Posts: 2,818
    Is every small independent used lot considered to be a BHPH? I that what it takes to stay in business?
    There sure are a lot of them in this area... I was hoping the majority of them just sold used cars to people who might actually be able to afford them.
    -Mathias
  • driftracerdriftracer Member Posts: 2,448
    by buddy started with an old trailer on a gravel corner lot and 6 cars. The only idea, not to over-simply it, is to keep more money coming in than you have going out.

    Size doesn't matter, when it comes to BHPH lots - it's the number of cars on the street, bringing in those weekly payments.
  • lemkolemko Member Posts: 15,261
    ...for the business owner, but not such a great deal for the customer. I'm sure there are plenty of desperate people who will buy from a BHPH lot but there are better alternatives.

    If a poorer person needs a car, why not just buy an older car for a couple hundred and just be done with making payments? Heck, good cars can be found if you're not too picky and take your time to look. I knew a girl who got a really nice 1988 Ford Crown Vic for a mere $800.
  • driftracerdriftracer Member Posts: 2,448
    "If a poorer person needs a car, why not just buy an older car for a couple hundred and just be done with making payments?"

    because people don't want to bee seen in a $500 car, they have to impress their friends and neighbors, masking their poor credit and low income -

    In that light, they'll pay WAY too much for a 5-6 year old Pontiac Bonneville with 119,000 miles, drop $500-1000 in down payment, plus $100 a week, plus full-coverage insurance...

    Instead of doing like I did when times were tough - buy a decent beater, save money, pay off bills, clean things up, and then buy a new car when you can afford it.

    Long story, took me 6 years, but I overcame major medical problems and job loss because I didn't do the BHPH thing because I HAD to have some bling bling in my ride.

    You'd better bet that if I'm in a position to do it in a few years, I'll jump into the BHPH scene with both feet and a two truck (and extra sets of keys). There'll always be idiots who have to have that nice newer car or SUV, although their credit sucks and they have low income - I'll be taking those down payments and repoing cars just like on TV.
  • pernaperna Member Posts: 521
    So after the car is repo'ed, what does the customer have to pay to get it back? This is the mystery to me of BHPH lots. If you just make the customer pay the amount he's late, it doesn't seem like a very profitable venture.
  • driftracerdriftracer Member Posts: 2,448
    "So after the car is repo'ed, what does the customer have to pay to get it back?"

    The customer pays the repo fee (usually $250-300) that is stated in the contract, plus any payment amount they are behind in order to get the car back.

    If it isn't paid, whatever the customer has paid into the car is gone, and the car is sold again.
  • jratcliffejratcliffe Member Posts: 233
    Could be worse - the "Rent to Own" furniture places have a very simple policy: you're late on a payment, you've lost the furniture, and any equity you've built up. In other words, if you're "renting to own" for 60 months, and in month 59, you don't pay, they take the furniture back, and you get squat.
  • lemkolemko Member Posts: 15,261
    ...is reserved for those with really bad credit. Before you know it, you've paid $2,000 for a $400 television set. The Philadelphia newspaper did an expose' on the rent-to-own business a few years ago.
  • vtsurfervtsurfer Member Posts: 4
    My payoff is only $10k, and most private party values are at least $14,000. My question is, what is the appropriate procedure for selling a vehicle you don't have the title to? It's with FMC, although I do have a copy of it. Do I accept a bank check, and just fill out a bill of sale and payoff the vehicle, then wait for the title?
  • driftracerdriftracer Member Posts: 2,448
    that's about all you can do - sell the car with a written bill of sale explaing fully that the title will have to be procured from the lender - if you call the lender in advance and have a point of contact on stand-by, that usually gets things happening quicker.
  • rroyce10rroyce10 Member Posts: 9,332
    ...... It all depends on where you live ...

                Call Fomoco on their 1-800# and explain to them that you have that bugger sold and where might be the closest office and/or dealer to actually do the paperwork in and which office is holding the title ... like here for example "some" not all are being held in Maitland and they will send the title overnight when they receive the funds, of course you pay for it .l.o.l. .. that can be accomplished in short time if you send the funds Via wire transfer ...

                  I hope this helps ...

                            Terry.
  • maximus3000maximus3000 Member Posts: 3
    I have a 2002 Tahoe that I am about $7500 upside down on.
    I would like to find someone to 'take over' the payments.

    Would they be able to get insurance on the vehicle,HOW?. And would I have to register the vehicle in their name?

    Any help or suggesstions on the matter will be appreciated. THANKS
  • steine13steine13 Member Posts: 2,818
    That is not going to happen. If someone "takes over" the payments, they will in effect "take over" your negative equity, i.e. pay you $7,500 more than the car is worth... why would anybody want to do that?
    Also, what does that have to do with insurance? When someone does take over payments, there still has to be a a transfer of ownership... if you plan on having someone else use the car while it's still in your name, better be prepared to "take over" their driving record for a long time. Not a good idea.
    Being realistic rather than helpful, I remain,
    -Mathias
  • mirthmirth Member Posts: 1,212
    The only reason I can think why someone would want to take over payments is a) there's zero downpayment, b) they can't scrape up enough money to buy the truck at the current value, and c) they can't get financed. Which leads to my next question: wouldn't the lender have to qualify someone before they took over a payment? Seems like a repo waiting to happen if you don't. Perhaps maximus is trying to get around that by keeping the loan and car in his name while someone else with questionable credit pays for it and drives it. That would explain the question about insurance and registration. Max - basically, if you own the truck you have to register it and buy the insurance policy yourself. Even if you work out a side deal with a buddy, you're still responsible if he gets into an accident and would be the one on the receiving end of any lawsuits as the vehicle's owner.
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