$20,000 negative equity, what should I do?

Malcq3 · December 2024

I have a 2019 Tesla Model 3 LR with 101,000 miles on it. I still owe $40,000 I understand that I made a mistake but can someone help me come up with a plan to get out of this hole. I was thinking of leasing another EV maybe for the tax credit but I would need a lot more incentives and rebates. Which vehicles have the most discounts to eat up this negative equity?

xwesx · December 2024

If you want to get out of this by refinancing (via a different vehicle, etc.), your credit score is going to play heavily into what you can do with it. I think the big issue with trying to find something with enough incentives, etc., to cover the gap, or at least cover it enough that you can roll into another vehicle, is that the gap doesn't disappear because all those discounts play into the used value of the car once you take delivery.

What was the length and interest rate on the original loan, and did you buy it new?

You might just drive the 3 until the wheels fall off... and make sure you carry gap insurance until they do!

oldfarmer50 · December 2024

If your income can manage it try doubling up on payments until you catch up. As stated you should drive the current car until the wheels fall off and when you do replace it buy the cheapest replacement possible (think Versa) for cash if possible. With the monthly savings build up a nest egg so that you have a substantial down payment for the one after that.

A lease will just get you into a cycle of never ending monthly payments so unless the reduction in said payments allows you to build up a cash reserve I wouldn’t do it.

Only you know your financial situation so do what you think is best.

corvette · December 2024

A Mercedes EQE lease might be able to absorb the negative equity, but the payment isn’t going to be cheap like it is for someone who doesn’t have negative equity.

qbrozen · December 2024

This doesn’t make sense on the surface. Did you buy used? Did you bury negative equity in the Tesla?

Michaell · December 2024

Does it really matter how the member got into this position? Would it alter any advice you would give them to get out of it?

jmonroe1 · December 2024

Michaell said:
Does it really matter how the member got into this position? Would it alter any advice you would give them to get out of it?

————————————————
It could if you’re trying to determine the level of a person’s financial understanding/incompetency.

jmonroe

Michaell · December 2024

jmonroe1 said:

Michaell said:
Does it really matter how the member got into this position? Would it alter any advice you would give them to get out of it?

————————————————
It could if you’re trying to determine the level of a person’s financial understanding/incompetency.

jmonroe

But, my question stands - would you give different advice based on that information?

jmonroe1 · December 2024

Michaell said:

jmonroe1 said:

Michaell said:
Does it really matter how the member got into this position? Would it alter any advice you would give them to get out of it?

————————————————
It could if you’re trying to determine the level of a person’s financial understanding/incompetency.

jmonroe
But, my question stands - would you give different advice based on that information?

————————————————
Yes. Knowing what the debtor knows/wants/expects, you can suggest ways of saving a couple hundred or a couple grand. But they still might not want to bite the bullet because it takes discipline to get out of debt. Wanting/getting what you can’t afford has gotten more folks into debt than anything I can think of.

jmonroe

qbrozen · December 2024

@jmonroe1 said:
————————————————
Yes. Knowing what the debtor knows/wants/expects, you can suggest ways of saving a couple hundred or a couple grand. But they still might not want to bite the bullet because it takes discipline to get out of debt. Wanting/getting what you can’t afford has gotten more folks into debt than anything I can think of.

jmonroe

Yep. What he said.
Are we talking rolling negative on top of negative? Or was it just a REALLY bad deal? My advice changes depending. I’ve also seen many situations where, when digging further, we find out it isn’t as originally stated. For example, I recall one instance where the poster was confused how it all worked and they were stating the original MSRP as what they owed. Silly, I know, but some folks are dangerously clueless.

Not to mention, a 2019 with 100k miles? New or used is very valid here. Does the OP drive 20k/yr? If so, we can rule out leasing. And using up a vehicle that fast is going to keep compounding this problem and I’d steer the OP to something extremely inexpensive and likely low-miles used.

$20,000 negative equity, what should I do?

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