Overhaulin'

"Upside down" in car loan and want new car, anything I can do?

I financed a 2003 Hyundai Sonata about a year ago to help build my credit and was told by the dealer that after a year of making payments I could trade it in for a higher value car. What they DIDNT tell me was that my car is now only worth about $2,000 and I owe over $7,000 leaving $5,000 negative equity. The car has 138k on it and I was not planning on keeping it for long when I bought it because of the high milage and I want to trade it in before I start having problems and dont really want to put money into a $2,000 car. Aside from paying more on it, what are my options...if any.

Public Comments

1. wrecking it and letting your insurance company pay you... they normally give more than what it is worth... but it will definantly raise your rates
2. There is not much that you can do. They ripped you off. Even if you wreck it, the insurance company will only pay you what it is worth. Here is what it is worth; Private party value Excellent $3,720 Good $3,345 Fair $2,870 Trade in Excellent $1,975 Good $1,675 Fair $1,175
3. Oh those rotten car salemen! Why in the world wouldnt they share their crystal ball and tarot cards with you? Of course they can see the future and know what your car would be worth. They all can. Its voodoo and they don't want buyers to know it! Be real. Your dealership had as much chance of seeing this financial meltdown as you did. Car values plummeted. A year ago, things were slowing down but non of us expected to see this freefall in car sales and values. Keep making your payments, add a little extra, and pay the car off. You likely had a very high intereste rate because - as you said - you were establishing credit. that means that you paid a premium in interest to get a bank to take the loan. Double up on payments if you can, and when its paid off, drive it til the wheels fall off.
4. Credit rating only measures your ability to repay a bank, which means you are in debt often. What a costly price to pay when cash takes care of all that jazz. Your only option is to pay off more and often.
5. Either dig up the $5000 in cash or keep driving it until the loan is paid off. You can no longer roll the balance on a car loan into a new loan. That is one of the things that caused the credit crunch in the first place.