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



  • Best option is to suck it up and keep paying for the Volvo. You have been paying it for years. In another 20 months, or in about spring of next year by my calculations, you will own a very nice car free and clear.

    The other option would be refinancing which might be possible, but would ensure that you would remain upside down longer. Maybe stretch it out for another year with a better interest rate, but by then you are financing an 8 year old car.

    Rolling 5k of negative equity into another car would be a bad, bad move. That means you would be paying 20k for a 15k car.
  • eharri3eharri3 Posts: 645
    IS before you calculate the finance charges on the inflated price of the new car.
  • ms_mayorms_mayor Posts: 113
    ptrekker says rolling the neg. equity is like paying 20K for a 15K car...

    Very true, and that 15K car will be worth even less once you drive it off the lot.
  • kyfdxkyfdx Everywhere, USAPosts: 122,878
    No one can make negative equity "go away". If you pay MSRP for a car that usually sells for $2K less than MSRP, and roll the amount into the loan, you'll soon find you are the same amount upside down.

    In regards to the Volvo, you either paid too much, put down nothing, or just got unlucky and bought a quickly depreciating car. Whatever reason, the cheapest way out of your dilemma is to just keep paying on your current loan. Anything else you do will just compound the problem.

    In regards to the Subaru: You aren't paying $560/mo. for the Subaru, you are probably paying $380/mo. plus another $180/mo. for the negative equity you rolled into the loan. Trading the car for another car will not fix that problem. To fix your problem, you have to pay off your debt. Keeping your current car is almost always cheaper than buying another one. Try to separate the payment from the car. They really don't have anything to do with each other. The large payment is a result of past mistakes. Learn from them, rather than compound them. For both of you, its better to just suck it up and make the payments.

    I've been there, and it can be fixed, but it takes discipline and its not fun.

    Good luck,

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • I gotta agree with the consensus... If you took out a 60 mo loan, guessing you made about 12 payments or so(said you had it just over a year), your total payments for 48 more months is about 26,880. The KBB private party value of an '02 Limited Outback 24k Excellent(no problems at all) is 20k. Which means taking out intrest, you are probably still at least 3-4k upside down. gas probably isn't killing ya on it, and I doubt insurance is... so it's difficult to justify trading it unless you can make a substantial difference on the payment while keeping your insurance/maintenance/gas bill at bay....
  • Kirstie_HKirstie_H Posts: 11,077
    A midwestern newspaper is looking to talk with recent car buyers who had negative equity in their trade-ins. (In other words, your old car was worth less than the remaining loan balance.) Please respond with your daytime contact info to [email protected] by 5pm Eastern Monday, Feb 9.
    Jeannine Fallon
    PR Director


    Need help navigating? [email protected] - or send a private message by clicking on my name.

    Share your vehicle reviews

  • Sorry about your difficult situation. My advice seems to be a bit out of step with what others have been saying, but is probably what your Parents (or Grandparents, depending on your age) would have to say:

    Sell the Volvo for as much as you can get for it and buy a good-running, if not pretty or fast, used car you can keep for a few years. If you keep the used car cost down to $2,500 or so (which can be done) you'll need to come up with $6,000 to $8,000 in cash or loan. Pay off any loan as quickly as possible (at $500/month it would only be two years at most), then keep the used car another two or three years and save that $500 each month towards a better used car, or if you must, a new car that you will never be negative in.

    That's my advice
  • janzjanz Posts: 129
    that the $2,500 car lasts 5 years...
  • steine13steine13 Posts: 2,706
    It's an art. And it requires luck. I recommend against it if the back's against the wall financially... much better to go with the $6k 2001 Prizm, inspected of course, and then drive it a loooong time while saving money.
    The cheap car thing is really iffy... I've done well with the $1-2k variety, but I quickly learned to have TWO of them... and I did all my own work... and I've done almost as well with cheap new cars bought right.
  • lemkolemko Philadelphia, PAPosts: 15,306 a Chevrolet Caprice, Crown Victoria, or Mopar M-Body. These cars are darn near bulletproof. Repairs and maintenance are cheap and easy. Parts are plentiful.
  • mamameowmamameow Posts: 5
    Hi need your feedback. I am in the same situation being upside down. I own an 03' Taurus and am 7G's upside down also. I will have the money to close the gap (assuming I can get 9-10 grand trade in like a few have offered) and was wondering what I should do. I am thinking of applying the 7 grand to my Taurus BEFORE I GO TO THE DEALER TO BUY NEW OR USED. I want out of this pile and i look at it this does not matter what day of the week it is....unless I pay down this vehicle, I will NEVER get out of it, and even if i paid the thing off i will still be screwed (my fault of course) Is this the right approach to take to get into a new vehicle? THANKS
  • driftracerdriftracer Posts: 2,692
    if you sold it privately. Check out your payoff, advertise using a nice ad, pay the difference, and press on.

    Make sure you're not going from the frying pan into the fire by trading/selling the Taurus only to bury yourself in another ride.

    Is the Taurus itself the problem? Getting into another NEW domestic is going to put you in the same place. You'd be better to pay it off early, drive it for a couple of years, and not drop a ton of cash if you don't have to.
  • mamameowmamameow Posts: 5
    I will consider this option. I am just itching so bad to get out of it but either way, I am buried and thats that :0)
  • driftracerdriftracer Posts: 2,692
    what are you looking to get into? I ask because it seems it had better be worth it before you throw big money into paying off the car just to jump into something else.
  • kyfdxkyfdx Everywhere, USAPosts: 122,878
    Something tells me that "bad itch" to get into something else, is how you got so far buried to start with... I find the best way to get out of debt is to keep what you have, and keep making the payments. Of course, the car biz would be hurting, if we were all like that.


    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • rangerranger Posts: 9
    New to this site so I hope I'm posting in the correct post. I own a great 2003 Econoline 350 passenger van. Bought new and got a great deal on it. Currently owe about 12,780 on it. The problem is its gas mileage. About 11-12 city & maybe 17 hiway. I knew it had poor mileage when I bought it but I was banking that gas prices wouldn't go above $1.60. WRONG! Anyways, I would like to trade it in on a 2004 Toyota Sienna van AWD. Price is about $31,000. Trade in value on my van is around $21,000. I know the Toyota dealer won't budge from the MSRP much. I'm also afraid he won't give me anywhere near the blue book on my van. (why would he want a full size gas guzzler sitting on his lot). I haven't been through the dealer yet to ask questions because I don't want to show my hand yet.Any thoughts on this? Mucho appreciate it!
  • driftracerdriftracer Posts: 2,692
    if it's an XLT with a 5.4, non extended, RETAIL value is around $21k, not trade-in. If it's an extended van, add about $900.

    Realistically, these vans are EVERYWHERE as fleet rigs and rental returns and usually see $16-17K wholesale. You're still in a good equity position, but you're nowhere near close to the $10 grand up you're thinking.

    Siennas are pulling close to MSRP, so you're realistically looking at a $14K difference figure.
  • rangerranger Posts: 9
    It's a chateau package, non-extended, 5.4. Should be interesting to see what kind of trade in the Toyota dealer will give me.
  • driftracerdriftracer Posts: 2,692
    you might seriously consider selling it yourself or offering it to Carmax or a Ford dealership. Chances are, the Toyota dealer will wholesale it and you probably would not do as well there.
  • q45manq45man Posts: 416
    What am I missing if you drive 15,000 miles per year at an average of 14 MPG you use 1071 gallons, if you trade for a more expensive van that gets better mileage , you have an extra amount in payments plus pay sales tax on the new amount but save 250-280 gallons at best per year......the extra sales tax alone would be $2,000, no to mention higher payments.
    It would take 1,333 gallons at $3 per gallon or 1,600 gallons at $2.50 to break even.

    4-5 years if not more.

    Now if you drive 30k per year it might make more sense.
  • grandtotalgrandtotal Posts: 1,207
    What you're missing is that Ranger wants to change.
  • rroyce10rroyce10 Posts: 9,359
    ........ 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.

  • q45manq45man 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 Philadelphia, PAPosts: 15,306
    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 Everywhere, USAPosts: 122,878
    FIFTY dollars down, FIFTY dollars a month...

    For FIFTY YEARS!!!!

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • baby_armbaby_arm 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.
  • 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.

    Smart Shoppers / FWI Message Boards
  • grandtotalgrandtotal 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.

  • driftracerdriftracer Posts: 2,692
    your loan agreement has allowed you to shirk payments on principal

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

    Of course the buying individual has to enter into an AGREEMENT.
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