Overhaulin'

How do I get out of of my upside down loan on my car??

I have a current car payment of $314.69 on a 2005 Ford Focus. It is worth about $7900 and I owe almost $14K. How do I get out from under this loan and maybe lower the payment without killing myself on interest?? There is a program called 'Drop the Payment". But it sounds too good to be true. Can anyone help me?

Public Comments

1. I hope you learned your lesson about buying a car new. Anyways, the only way is to roll it into another car loan or pay it off. The first option will likely get you further in debt.
2. Do not go to Drop the Payment. It will damage your credit rating. You like many are stuck with a loan you do not like nor a car payment you like. Too bad. This is what happens in a greedy world which is more concerned about looks than function. You are most likely upside down because you traded too often, and kept rolling your other loans into the new loan. Eventually people get really messed up. Pay this car off. That's the only way to get from under being upside down. If you qualify for a very low interest home equity account, take out the amount needed to pay off the car. (get a payoff good for 30 days; if you overpay the car loan bank must pay you back the extra). You can deduct mortgage interest from your taxes. You cannot deduct car payment interest from your taxes. Do not buy another car UNTIL THIS ONE IS PAID FOR IN FULL! In the future, buy used cars at extremely good prices. It may mean waiting a few months for the best deal, but that is better han rushing and getting screwed.
3. Don't know about the program you mentioned, but if sounds too good to be true, it is. There is no way to get out from under debt that you owe, or negative equity on a car loan. You can move it around by rolling it into another loan, but that's probably how you came to be upside down now, so you know that it only makes things worse, not better. The absolute best way -- and only way -- to get out of your upside down situation is to simply keep your car and keep paying until you are no longer upside down. Then, you'll have all kinds of options available to you.
4. Up your payment. Don't pay $314.69. Every dollar you put in over that amount goes to the principle of the loan. Pay $400 a month instead until it balances out.
5. Whatever you do, don't get a home equity loan to pay down the car...that is insane. Keep the car, pay extra as you can until you are able to trade it in. You won't be able to trade it and roll in $6100 of negative equity and lower the payment...the math doesn't even come close on that one. You are in a cycle of trading too soon...cars take the majority of depricition in the first few years..that's why you need to keep them longer, lease or make a large down payment. Good luck
6. The ONLY way to get out from under the loan is to pay it off in full. You are not alone, most people are upside down, although your situation is extreme. Did you maybe trade in a car to get the Focus and the dealer rolled the negative equity into this loan? If so, that's why you are nearly $7k under water on this deal. I'd suggest that you get a second job to bring in more money and make double payments. Unless you have $7000 in the bank to cover the deficit, trading or selling the car is going to put you in a worse predicament.