Overhaulin'

What to do if upside down on car?

My girlfriend is terribly upside down on her car. Her car is approximately worth $15k on Kelley Blue Book and she owes $20k, because of interest. It's going to be a hard car to sell for $15k. Does anyone have any suggestions? Is there anyway the bank let her out of the loan if she gives the car over to them? Any advice is greatly appreciated (other than letting us know how expensive of a lesson in economics this is).

Public Comments

1. Keep making payments until the balance gets closer to the value. If you give the car back (repo) it will kill her credit and she will have a very hard time getting another loan. She could also look at refinancing the car loan.
2. She can try trading it in but it would more then likely go on top of what you buy for a loan, Either she sticks with paying for it, or try to sell it out right. It was a bad buy from the start if it depreciated that much.
3. Keep paying on it is your only real option. You could sell it, but you'd have to come up with the difference between your sales price and what you owe. You CANNOT give it back to the bank. They would take it and auction it off and you would still be responsible for the difference. They don't care what it auctions for and the difference would be much more if the bank sells it. Pay off the car. Keep driving it for years after it's been paid off. Keep making car payments (to your savings account) after it's been paid off so that when it needs repair or it really is time to replace it you have cash to do it. Vow to never take out an auto loan again in your life. good luck! ps - make sure your insurance will pay off the loan if the car is totaled. If not, you could total the car and still owe the difference between it's value and the amount owed.