Overhaulin'

Catch 22 with Upside Down Car Loan?

We were very badly ripped off on a vehicle we purchased last year. Our interest rate is in the.18% range, and we owe about 10,000 dollars more than the car is worth. It is impossible to refinance the car, and we were told more than once that we are basically throwing our money away. Someone suggested we just buy and take the credit hit, but now we are in the process of buying a home, and don't want to jeopardize that process. Now we need to decide between a few options. Should we buy a vehicle, pay 2000 dollars down that was otherwise reserved for the house, and pay 125 more per month for another vehicle? Or should we continue to throw away the cash in the car, which is nearing 100000 miles, buy a home, and then try to purchase vehicles at a lower rate, lower payment, and then give back the current car we own? Should we try to sell the car to a private party, and ask the bank to take the loss? Any suggestions or experience would be extremely helpful.

Public Comments

1. One thing at a time, buy the house, try to put as little as possible down. Then look at trading it in and using some cash to reduce your debt
2. ok what i would do, I would keep paying on that car until you get the house, then after you get the house, get a vehicle, and try not to get screwed again, then...as bad as it sounds... let them come and get your older car. Make sure you make all of ur payments though for a long time as ur credit scores will go down obviously. So you will still have your house, still have a car, and be ok. Also, pray about this. GOD will give you the best answer i promise. ( : Take care and GOD Bless
3. the answer is pretty simple: keep the car you have and continue to make payments until you are no longer upside down. Any other solution is going to cost you serious money and your credit rating. If you let the car go back, you will still owe your upside down loan balance and your credit is ruined for seven years. If you sell the car yourself, you'll have to have the cash to fully pay off your loan. No bank is going to "take the loss." If you don't have the cash, you can't sell the car. You may be "throwing away money" in your car, but it is the deal you signed up for and now you have to live with. There are no magic ways to escape.
4. The problem is if you give the car back, they WILL come after you for the deficincey balance which will likely be more than the $10k you estimate. If they win a judgement, which they would, they could garnish your wages which would make you lose the house. Thats assuming you can even get financed for a house which is questionable given you have an 18% car loan rate. Selling to a private party is great, only who is going to pay that much more than its worth ? Thats not really an option. You are kind of stuck. Maybe next time you will pay more attention before you sign a huge contract with a high rate.
5. OK -- first of all, no one 'ripped you off' -- only an idiot would buy a car at 18% interest. Someone suggested you take the 'credit hit' -- meaning you let the car be repo'd. Clue: you can't just decide to give a car back because you made a bad deal. The car will be repossessed, sold at auction for bottom dollar and you will be SUED for the difference between what you owe and what the car sells for. There is no way out of that situation -- the judge will throw the book at you and if you fail to make those payments you will be in contempt of court and risk having your property seized and bank accounts emptied. Either way, your credit will be ruined for three years. Your best option is to clean the car up and sell it for what you can and strike a deal with the bank/finance company to make payments for the remainder of the loan. It will be hard but that's the price for stupid (providing, of course, you want to keep your credit intact). One more note: you ALWAYS throw away money on a new car. They lose a minimum of 20% of their value the second the tires hit the pavement so it's always best to buy cars that are at least two years old.
6. You have no business buying a home right now if this is the kind of jam your financial acumen has gotten you into. That is almost as funny as hearing that my sister with about $30,000 of college debt, renter of a $900/month apartment in a gated community because she is uppity, and was looking to buy a house...got canned from her job at OSHA because what she was asked to do was not "in the job description" Your home buying process is not on the radar right now. Try again after you have cleaned up this mess.