GreasyP

Back in the days of yore (mid-2001) I got myself a shiny new Hyundai Accent GL. Did my shoddy-but-reliable 1990 Toyota Corolla stop working? No. Did I have a sudden influx of cash? No. Why did I do it, then? Not a clue. I guess at the time I was under the misconception that posessions brought happiness. But that's irrelevant. The fact is, I've got myself a really nice-looking, dependable car. That I can't really afford. Doing the math, I figure it's around $375 a month with loan payments, insurance and maintenance. Throw in $35 or so for gas, and I've got a problem: that's close to what I make in a month, total. See, I'm trying to go to college at the same time. Not to mention trying to PAY for college. And rent. I keep having to take semesters off to refuel my bank account.

I've got about $7600 left on the loan. Problem is, according to our friends at Kelly Blue Book, the car's only worth about $6600. And I'd probably have to sell for even less, seeing how cheap brand new cars are right now. I keep seeing cars almost identical to mine going for $5000, and it pains me to no end.

So please, my friends, how can I get this 100-ton weight off my shoulders? I want to go back to a nice, affordable but reliable early-'90s Toyota, or something similar. I don't want this huge expense hanging over my head each month as I try to decide between groceries, tuition and paying for my car. I'm no longer interested in looking nice as I drive around. Hell, I don't even want to own a car but I'll probably need something because I travel quite a bit.

I suppose bankruptcy or just letting them reposess is an option, but that could do more harm than good in the long run, what with credit ratings and higher interest and such. I made a mistake. I've accepted that. I'm ready to do what it takes to correct that mistake. But what can I do?

__________________
---<>---^^---<>---^^---<>---
---^^---<>---^^---<>---^^---
---<>---^^---<>---^^---><---

maiden_fan_us

To maintain your credit you must pay off the loan. You could sell the beast for 5000, put that in the bank and make your payments from that for a thenext year and a half to get the immediate cash flow problem solved. Of course you will still be liable for the balance of 2600 at the end, but at least you'll have some breathing room. You will also reduce your insurance, maintenance and gas expense.

HTH.

__________________
Remember Eric, there are no stupid questions, only stupid people!

GreasyP

I was thinking about that, but I was under the impression that I couldn't sell the car without paying off the loan in full, since the bank has a lien on the car and it's the collateral for the loan. In fact, they've got the title, too.

__________________
---<>---^^---<>---^^---<>---
---^^---<>---^^---<>---^^---
---<>---^^---<>---^^---><---

onetime2

You are basically stuck unless you want to ruin your credit. Can you borrow a couple of thousand from your parents (or someone else)? Or you will need to save up enough to cover the difference between what you can sell it for and what you owe.

__________________
Strive to be more curious than ignorant.

Lebell

Yup, you're screwed.

You can't sell the car without paying off the loan because technically you don't own the car.

And yes, midway through any loan on any car, you will owe more than the car is worth.

Fall on your sword and beg mom and dad for help, if you can. Otherwise, you'll have to find a way to pay the difference in the price of the car and the amount left on the note.

You also might contact the bank about voluntarily surrendering the car to them, (as opposed to a repo). I don't know how this will affect your credit, tho, but you can at least ask them. They might even work with you on reducing your payments, as they really don't want you to default on the loan either.

Good luck!

__________________
"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience." – C. S. Lewis

The ONLY sponsors we have are YOU!

Please Donate!

crony

What about refinancing? The positive side to it is lower monthly payments. Negative is more payments, but at least they'll be manageable.

GreasyP

Good advice all, thanks. I think Lebell and Crony are right, talking to the bank seems the best idea. I refinanced not too long ago, but I didn't extend the # of payments, just got a lower rate with a different company. Maybe if I go chat with my credit union (where the loan is now) they'll come up with something to help me out. I don't know if they can extend the loan much, though, it was already a 5-year when it started (about 3 left).

My parents (my dad, really) are of the school of thought that you shouldn't pay your kids through college and you shouldn't bail 'em out when they make mistakes. They aren't even giving me anything for college, they're not about to help me pay for a car. Not that I'm complaining, it seems a good way to raise your kids. It's sure made me a lot more responsible financially than any of my friends. Well, except for this little trip-up, obviously.

__________________
---<>---^^---<>---^^---<>---
---^^---<>---^^---<>---^^---
---<>---^^---<>---^^---><---

thingstodo

I offered my kids a school deal: you make Bs or better and I reimburse your tuition. That means you pay up front. You might discuss this with your old man. Parents mainly want to know that money they are coming up with isn't being pissed away. Especially if you fess up about the car situation. <ight help with the cash flow.

Otherwise, talk to the bank (good luck) and forget your personal life because you'll be going to school and working.

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.

GreasyP

Not my dad. He's quite rich now, he's been very successful in business, but he came from a very poor family and says starting with nothing is what made him such a hard worker. Therefore, his kids should do the same. Work and school is all I ever have time for anyway anymore, so that doesn't worry me too much.

__________________
---<>---^^---<>---^^---<>---
---^^---<>---^^---<>---^^---
---<>---^^---<>---^^---><---

blackdogmoonrak

They had it on the TV where you pay people and they burn or "drown" your car for you.

I suggest you don't try it though.

Cleveland

Why not find the car you really want (early 90's toyo) at a dealership offering to pay off your loan whatever the amount is? You will have them pay the car off, then you will step into another loan with the car that you want (at a hopefully lower payment).

GreasyP

Why would they pay off my loan when it's way more than what my car is worth? Unless they way overcharge me on the car I buy... Could still save me quite a bit, though. I'll look in to that.

__________________
---<>---^^---<>---^^---<>---
---^^---<>---^^---<>---^^---
---<>---^^---<>---^^---><---

tulax

try this, if your father won't help you pay off the loan, maybe he'll at least be willing to co-sign or put up collateral for the balance of the loan after you sell the thing. then, after biking everwhere for a few months, you can try again with a cheaper car.

__________________
"Me fail English? That's unpossible"
- Ralph Wiggum

MadMartigan

here is a thought that no one else has come up with....

Try to find someone who needs a vehicle and can afford the payments but may not be able to come up with a down payment to TAKE OVER THE PAYMENTS. the loan basically transfers to them and is considered payed off for you. Not to mention that the loan would be payed off way early and would make your credit score go up. Not saying that this is easy, but it is a solution. talk to your bank again and see if that is a possibility, MOST credit unions will work with you.

Good luck

__________________
Nice to be here, thanks for the invite

Concertina

Okay...I work in the Indirect Loan Department of my Bank. I deal with this exact shit every day.

Go to a dealership. Get your the little cheap car of your dreams. Trade in the car you don't want. The dealership normally pays for the car IN FULL. It doesn't matter how much the car is technically worth; it's all about your loan balance and how much they think they can sell the car for. If they want your business (which if they're anything like the dealerships in our area, they will) they'll do it.

They own the car, they get the title, you get the smaller monthly payments and car of your dreams....

Ta-Da!!!
m

__________________
~I got a fever above my waist~

QuasiMojo

hmmm.
GOOOOOOOOOOOOOOOOOOD LUCK Brother.

ummm. Do you have any Biker friends?

make sure your insurance is paid up and have someone steal it/torch it.

*holds hands over mouth* did I just say that?
now hoooold on!
That would be wrong.
very.

It's just that I and a lot of people I know have been through what you are going through. (And.....in a dark moment...I thought of the aforementioned scenario.)

*actually my ex-wife got a car she later could not afford. But one early morning she wrapped it around a telephone pole. She was OK but I would not recommend it.

__________________
AzAbOv ZoBeLoE

GreasyP

Well, looking at the extreme prices of insurance these days, specifically, mine, I think I'll pass, Quasi. I'd probably end up paying more in higher insurance rates than I did in car payments. Not to mention that damn "conscience" think that's always following me around.

Concertina, thanks for the inside perspective. I think that's definitely worth a shot.

__________________
---<>---^^---<>---^^---<>---
---^^---<>---^^---<>---^^---
---<>---^^---<>---^^---><---

FastShark85

Ahhh....it doesn't work that easily. You should have also said the new loan includes the amount you needed to pay off the trade-in car. The only way you lower your payments is by dragging the loan out further, like 60 or 72 months. Then you're repeating the cycle, and possibly making it worse since it will take even longer to get equity in the new car.

My suggestion: see if you can re-finance through a credit union for a lower rate and a longer term. It will lower your payments, but you'll be stuck with the car longer. You'll still owe more than it's worth (for a longer amount of time), but you should be able to make the lower payments.

Try also seeing if you can raise the deductibles on your insurance. Assuming you're a good driver and don't wreck the car, this should lower your insurance rates and free up more cash to make the car loan payments.

Other than finding someone to buy the car for the loan balance, you're stuck.

Ralvek

Haha, something I can post about! I am a bankruptcy specialist for an auto finance company...number one, don't file bankruptcy. Second, call the company your car is financed through and talk to them. If you have a good payment history they will often amend your terms or even refinance at a lower interest rate. If the balance is low you might even be able to get them to settle on the car for the value. Here's a hint for everyone, car company's hate to repo cars, it generally costs the company more than $7,000 in repo fees and lost money. Your best be is probably to trade in your car and get something with a lower payment. But with interest rates so low it's not a bad idea to see if you can refinance the loan at a lower apr...you'd be amazed what that can do.

__________________
Ban country music, it promotes inbreeding.

FastShark85

Ralvek:

Good advice. Repo'd cars are normally sold at auction and never fetch the amount owed on them. You're absolutely right that a bank/financing company would rather get paid according to different terms than repo the car.

As long as someone isn't behind on payments, they should be able to negotiate something better. It depends on whether the particular bank/financing company is open to alternatives. Some are, some aren't. I believe that those that aren't open to alternatives and allow the customer to default are missing the big picture.