Money/car loan question

[nick1985]

What I'm about to say may come as a shock to some of you. A story such as this has never been told in the history of mankind, so please bare with me as I regale you...










So my GF was financially irresponisble in the past /GASP


I know...some of you probably don't believe that. Well, its true. Basically she has a Lexus SUV worth 12k blue book...its got a few issues so she would probably get 10 for it. Here is the kicker, she still owes 19k on the POS.

Take this time to pick your jaw off your desk.


Continuing on, is there anything she can do? I was thinking she should go to a few banks and see if they would let her trade it in and they would cut a check for the difference tacked onto whatever a more resonably priced car would cost her. I'm a noob when it comes to car loans... Asking ATOT for financial advice (Techboyjk or whatever your name is, please dont post)

 

[Krazy4Real]

What year is the Lexus and how many miles does it have? If you choose to sell the car for less than the balance of the loan, you will need to probably take out an unsecured loan for the balance. A bank isn't going to tack on more than your future car is worth onto another auto loan.

Edit: You have to figure though that the new car is going to depreciate anyway. Unless you're looking to get her into a low end used car is it really going to be worth it? What exactly is wrong with the Lexus that you're looking to get rid of the car?

 

[Whisper]

I'd imagine that if her credit is still decent, the bank might let her roll the difference between the car's value and what she still owes on it into a new auto loan.

Problem is, the bank isn't going to just take the car and then give her the $10-12k (at least to the best of my knowledge). You'd need to find someone else to buy the vehicle, whether that be a dealership (who might pay the $19k still owed on the note, and then roll the difference between what they actually offered for the vehicle and what they paid on the note onto the cost of whatever new vehicle she buys) or an individual.

Just guesses, though, as I don't work in banking or auto sales.

Edit: Looks like the post above mine nixxed the bank rolling option. Unsecured loan might be her only option, unless a dealership is willing to eat the cost and then tack it onto the price of a new vehicle.

Although given that the new loan would then be way overpriced for the new vehicle, I'm not sure how the bank would look at that in terms of secured/unsecured status.

 

[CRXican]

silly ho needs to keep the car

 

[nick1985]

Originally posted by: Krazy4Real
What year is the Lexus and how many miles does it have? If you choose to sell the car for less than the balance of the loan, you will need to probably take out an unsecured loan for the balance. A bank isn't going to tack on more than your future car is worth onto another auto loan.

Edit: You have to figure though that the new car is going to depreciate anyway. Unless you're looking to get her into a low end used car is it really going to be worth it? What exactly is wrong with the Lexus that you're looking to get rid of the car?

2003 RX300 with 102k miles.

There is nothing wrong with it per say, other than the $615/mo car payment along with a high insurance bill. That car payment is sinking her, I'm just thinking of ideas to try and get her a different car with a lower payment. /shrug

 

[evident]

an RX300 eh? what is the payment on it?
probably better to keep it at this point

 

[nick1985]

Originally posted by: evident
an RX300 eh? what is the payment on it?
probably better to keep it at this point

Stated above, around $615/mo.


*edit*

1st time warp!!! woohooo

 

[rh71]

Originally posted by: evident
an RX300 eh? what is the payment on it?
probably better to keep it at this point

did you guys ever buy the RX?

 

[evident]

i'm not too sure in this situation on what to do. my gut is still leaning me towards keeping it. if you buy a new new car. its gonna be alot more than $10k, esp if you want something comparable to the lex.

i dont know if this is an option for you, but try paying it down quickly. eg making triple the payments to pay down the principal and then the car will be yours free and clear. otherwise it seems like the interest is gonna kill you/your gf. btw, what kind of loan was it? still paying off a car from 2003? did she buy used? what %?

 

[evident]

Originally posted by: rh71

Originally posted by: evident
an RX300 eh? what is the payment on it?
probably better to keep it at this point

did you guys ever buy the RX?

yeah. my gf bought a 2007 RX350 used w/ about 27k miles w/nav for $30k and she loves it more than me now.i think she got owned with the financing that she took, but her car payments are low.

 

[calvinbiss]

She needs to get a second job.

I doubt she is willing to go from a Lexus to a Kia Rio. That would be about the only option.

 

[nick1985]

Originally posted by: evident
i'm not too sure in this situation on what to do. my gut is still leaning me towards keeping it. if you buy a new new car. its gonna be alot more than $10k, esp if you want something comparable to the lex.

i dont know if this is an option for you, but try paying it down quickly. eg making triple the payments to pay down the principal and then the car will be yours free and clear. otherwise it seems like the interest is gonna kill you/your gf. btw, what kind of loan was it? still paying off a car from 2003? did she buy used? what %?

lol triple payments. Funny man you are.


The interest wont kill me, I'm not getting my good credit score involved with this whatsoever. I dont know the specifics of the loan, but she bought the car slightly used 4/5 years ago. How she still owes 19k is beyond me, I didn't want to open up that can of worms.

 

[Gothgar]

fuck 600 a month?

Better off keeping it, OR getting a shitty car for and selling it private party.

Get a personal loan to pay the difference on the car if you sell it private.

 

[nick1985]

Originally posted by: calvinbiss
She needs to get a second job.

She already does.

 

[kranky]

Selling is not going to help since she's so upside down on the car, unless she can come up with the $9K difference. No one is going to lend her an "extra" $9K on another car purchase, unless she has family who might help her out.

I would look into a refi to see if she can spread out the balance over 4 years. That would get her payment down some but she'll be stuck with the car for 4 more years.

How long has she been paying on it?

I think her best bet is to try for a refi, and if that doesn't work, suck it up until it's paid off. And she also better check with her insurance agent to find out if she's covered for the entire loan amount if something happens to the car. If the car is totaled or stolen, she wouldn't want to find out she has to come up with $9K more than the insurance settlement just to satisfy the loan.

 

[hanoverphist]

Originally posted by: kranky
Selling is not going to help since she's so upside down on the car, unless she can come up with the $9K difference. No one is going to lend her an "extra" $9K on another car purchase, unless she has family who might help her out.

lots of dealers around the valley here advertise that they will accept upside down trades on new vehicle purchase. all they do is roll the extra into the new loan tho, which may make it worse. or, she can get one of those 10 year loans and get the lower payment.

 

[Redfraggle]

Here's the thing, she was already taken on this car. There's no reasonable explanation to the contrary that she pays that much for that thing -- unless it was like a 36 month term. She needs to keep the car. That kind of negative equity is going to add around $200 in payment per month in addition to whatever else the new car would be. Also, any car that will hold that much negative equity will be very expensive to begin with -- leaving her in a worse position. She has to have either rolled in money from a previous car, or taken a ridiculous interest rate on this loan to have a payment that high. Even if I'm wrong about that last sentence ( I never sold Lexus, but various others makes, so don't know used prices of those, but that sounds nuts), you are still left with the reality that she is very upside down, and no bank is going to advance that kind of money on another car -- especially not with the market as it is. She needs to just pay this off and cut expenses elsewhere in her budget, I have seen this before and it's not gonna happen. She's stuck. Also, if it's that bad, she needs to take better care of it as well, or the value is only going to get worse.

 

[nick1985]

Thanks for the replies. Seems in addition to me, she will be bending over for Lexus for a while too.

 

[thomsbrain]

One possibility is that she might be able to refinance her loan, since the car is still less than seven years old and would be considered a "recent" used car. That would lower payments but increase the total amount of money she will eventually lose to interest.

If it was me, I'd be taking better care of it and focusing on paying the loan down as quickly as possible. From what you describe, she is one accident away from bankruptcy. If the insurance company totals her car, she'll still owe the bank $9,000 and have no car to show for it.

 

[jdjbuffalo]

Originally posted by: nick1985
I dont know the specifics of the loan, but she bought the car slightly used 4/5 years ago. How she still owes 19k is beyond me, I didn't want to open up that can of worms.

I don't get this... How can she be 4/5 years in and she is not only still paying for the car but she is still underwater!?

There aren't many car loans that are offered for more than 60 months (5 Years). According to my calculations, she has more than 3 years left on this loan. I've never heard of a 96 month car loan...

However, one thing that she might have done is a deferment (where you don't pay for the month but they still charge you interest). I know I've done it before when I was low on money. The only thing is that for her to still be this far behind, I figure she would have done this every few months. I don't know if any bank that would let her do this but I suppose it's possible.

Maybe the dealer and bank thought she would be an easy mark and they did something illegal/underhanded where they stuck her with more money and/or a longer than she was supposed to get.

I suggest getting more details so we can figure out what happened.

 

[spidey07]

Something happened to be that upside down on the loan. The only explanation really is she rolled being upside down on a previous loan into this one or she's got a super long loan like 84 months at a high rate.

More details are needed on the terms, financed amount, rate and length. Other than that she is keeping that car for a few more years until the amount owed is equal to or less than what the car is worth.

 

[boomerang]

Originally posted by: spidey07
Something happened to be that upside down on the loan. The only explanation really is she rolled being upside down on a previous loan into this one or she's got a super long loan like 84 months at a high rate.

I was just going to post that she probably rolled a previous loan (or two).

She's going to have to tough it out and try to make better decisions next time. The current lending climate will probably dictate that anyway. For that matter, the current lending climate will probably dictate she stay with what she has.

 

[nick1985]

Talked with her more about it. She rolled a previous car loan into this one. Looks like she will have to ride this one out.

 

[spidey07]

Originally posted by: nick1985
Talked with her more about it. She rolled a previous car loan into this one. Looks like she will have to ride this one out.

Well at least it should be a good lesson. Some positive can come from it. Cut all expenses, work more and pay off the 7 grand difference.

Or sell the car for the best dollar she can get, use low interest financing for the difference and get a beater. This will help with the money in vs. money out but she MUST get rid of this debt.

She can't change the past, she/you guys can only change the future.

-edit-
You were asking for a plan to handle the difference. You have two options.

1) keep the car and payments until you're even, I don't know the terms of the loan so I can't recommend anything
2) sell the car and find better terms for the difference in terms of a loan, credit card balance transfer, etc.

I'd be leaning towards #2 but it's all based on the terms of option 1.

 

[Capt Caveman]

Originally posted by: nick198

Originally posted by: calvinbiss
She needs to get a second job.

She already does.

Sounds like you need to get a second job.