YACT: How to get out of car loan?

Red

Diamond Member
Aug 22, 2002
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My fiancee and I bought '02 Civics new last year in September. We both drove '98 Saturn SC2s before the purchase. We also both owed about $9000 on the Saturn loans and negotiated $5500 trade ins. Soooo, basically after negotiating the price of the Civics and adding on the upside-down'ness of the Saturns, we bought ~$18,000 Civics...two of em. We did this for a few reasons.... reliability, interest rate, gas mileage, warranty, wanted a new car, etc. Well, we regreted the purchases approx. two months after owning the Civics. Why? The cost of such a boring econobox vehicle.

We both pay ~$340 a month for the payment... and we both pay about $2000/yr for insurance. Moreover, we pay about $600/yr each in gas ($50/mnth). That is close to $7,000/yr for an econobox. We want out! =) We make $10/hr like most other college students and $7,000 a year is about half our annual salary. My goal is to drop into the $150-200/mnth category along with cheaper insurance ala used car.

So anyway, my research is left me with the conclusion that it is possible to get out of a car purchase, but none of them are possible to me at the moment:

(1) Sell car on street for about $13,500. My current loan payoff is $15,900 so I'd have to come up with $2,400 ... not possible.
(2) Total car out - That's illegal, I'd never do it.

We need to save about $10k for wedding+honeymoon in 2yrs so I'd really like to find a super cheap, reliable, cheap insurance car to last me a couple years. Similar to what I did with the Saturn/Civic purchase, could I slap my current approx $2,400 on top of older car (like 5,000) to make a $7,400 loan and pay the sucker off fairly quickly? Advise me!
 

conjur

No Lifer
Jun 7, 2001
58,686
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I think you're confusing yourself (at least you have me ;) )

If you have $2400 to spare...sell the cars and payoff the loans if you're $2400 hooked.
If you're $2400 hooked on each car, you're pretty much screwed.
 

Red

Diamond Member
Aug 22, 2002
3,704
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You were right on the second one.... we are upside $2400 on each Civic... which will eventually even out, I guess in a year or so, but we were wondering if there was a quicker solution so we can start saving money NOW.... ie, slapping that $2400 inequity on older used cars.
 

conjur

No Lifer
Jun 7, 2001
58,686
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0
It's a never-ending cycle if you trade a car you're upside down on....best bet is to stick it out and look to increase income or reduce other costs.
 

Red

Diamond Member
Aug 22, 2002
3,704
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But what I'm figuring is.... if I slap that inequity on older cheaper car that I can get paid off faster..... then I eventually get rid of the inequity.
 

Red

Diamond Member
Aug 22, 2002
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Well, we don't have a house payment or anything like that, and we were able to comfortable afford our $280/mnth Saturn pymt, so we figured.... let's upgrade! But the why isn't very important in this situation... we realize we made a bad decision and are trying to recover ASAP.
 

conjur

No Lifer
Jun 7, 2001
58,686
2
0
win money from lotto
get help from family
get better paying jobs

you're pretty much screwed, dude.
 

Red

Diamond Member
Aug 22, 2002
3,704
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Conjur, you've screwed me twice in this post! Stop! =) No, really... someone please tell me about my idea of getting a $5,000 car (see my previous YACT thread) and slapping $2,400 inequity on it.
 

RossMAN

Grand Nagus
Feb 24, 2000
78,794
262
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You two made the mistake, not us, you did sign legal binding contracts to finance the vehicles.

The ONLY legal way out of this is.

1) Start saving up $ immediately (get a part time job, they are out there I don't care if it's bagging groceries at Piggly Wiggly's).
2) Once you've saved up the difference between selling the car and your loan balance, sell the car, payoff the remainder of your loan and never do anything stupid like this ever again.
 

conjur

No Lifer
Jun 7, 2001
58,686
2
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Originally posted by: Redhotjrm
Conjur, you've screwed me twice in this post! Stop! =) No, really... someone please tell me about my idea of getting a $5,000 car (see my previous YACT thread) and slapping $2,400 inequity on it.
the loan value of the vehicle is likely not high enough to be able to do that. Hence my opinion on the state of your screwedness ;)
 

RedRooster

Diamond Member
Sep 14, 2000
6,596
0
76
Take em out in the bush and play smash up derby with them. Blame it on wildlife, and you're set. :cool:
 

Sundog

Lifer
Nov 20, 2000
12,342
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Daewoo is having sales. Buy one car and get one free...2 for 1 deal...trade in your Hondas and take the $2400/each car hit.
 

ZaneNBK

Golden Member
Sep 14, 2000
1,674
0
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Originally posted by: Redhotjrm
Conjur, you've screwed me twice in this post! Stop! =) No, really... someone please tell me about my idea of getting a $5,000 car (see my previous YACT thread) and slapping $2,400 inequity on it.
No-one is going to loan someone that makes $10/hour $7400+fees for a $5000 car that's probably only worth $3500 wholesale (what they'd likely get out of it if you defaulted). I'm not trying to insult you here, just putting it truthfully.

You made a mistake. You're either going to have to default on your loans and file for bankruptcy (and screw your credit) or buckle down and pay off the cars until you're no longer upside-down.

Any solution you try to persue at this point (beyond paying off the cars) is just going to cost you more money. :(
 

kranky

Elite Member
Oct 9, 1999
21,000
111
106
You need to hope you don't get in an accident or have one of the cars stolen. Your insurance won't pay more than the value of the car.

Listen to RossMAN. Get a part-time job. No one is going to loan you $7K+ on a $5K car.
 

007bond

Senior member
May 11, 2002
337
0
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Originally posted by: RossMAN
You two made the mistake, not us, you did sign legal binding contracts to finance the vehicles.

The ONLY legal way out of this is.

1) Start saving up $ immediately (get a part time job, they are out there I don't care if it's bagging groceries at Piggly Wiggly's).
2) Once you've saved up the difference between selling the car and your loan balance, sell the car, payoff the remainder of your loan and never do anything stupid like this ever again.
Very good advice.
 

Red

Diamond Member
Aug 22, 2002
3,704
0
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Alrighty, that's what I thought, just making sure there wasn't a way around it. I work two jobs now, over summer, both $10/hr. I can afford the car payment, but it is hindering me in the savings process for my future obligations (wedding/honeymoon). I guess I'll stick with the Honda for another 8-12 months until it evens out... sell it to pay off the loan, and jump into a cheaper car.
 

DT4K

Diamond Member
Jan 21, 2002
6,944
3
81
I know how it feels. I've got a 9500 balance on my car loan. I could maybe get 8000 privately, while dealers will give me 5000-6000 on trade.

What others have said is true. There is virtually no way anyone is going to loan you 7000 for a 5000 car. Definitely not a bank. And even on the small chance that a dealership could make something work, you are still screwed because if your car is worth13,500 on the street, the dealer wont' give you any more than 10,000 on trade. And for 5,000, they'll sell you a car that's worth $3500 on the street. So you end up with like a 10,000 loan on a 3500 car.

Basically, trading in an upside down car at a dealership is only going to get you a lot more upside down.

Your best bet is to stick it out, maybe try to pay extra if you can, until you can sell the Civic to a private party for what you owe on it. You'll get a lot more out of it this way than you would by trading it in. Then go buy a much cheaper car.

How is your credit?
Can you qualify for a car loan through your bank or credit union?

If so, you are much better off buying a car from a private party. At least then, if you get a decent deal, you start off owing exactly what it is worth. Buy from a dealer again and I can guarantee you will be several thousand dollars upside down as soon as you sign the papers.

EDIT: by the way, aside from being a felony, totalling the car wouldn't help you anyway because the insurance company will only pay what the car is worth, not what you owe on it.

 

Bleep

Diamond Member
Oct 9, 1999
3,972
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You might put a add in the paper to take over the payments and maybe some fool will do it.

Bleep
 

BooGiMaN

Diamond Member
Jul 5, 2001
7,955
0
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dude sounds like ur in a suckass situation...

wish i could help..but it sounds like you should have thought this over before you signed those papers...

and now u want to put yourself even deeper int he hole by having a 10k wedding?

my advise is that you sit down and think about what the heck is the deal with ur loose spending

and why are u drivign the same car as your fiancee all the time..u whipped or something...dont tell us she dresses u too :p
 

Viper GTS

Lifer
Oct 13, 1999
38,089
405
136
Two $18,000 loans on two $10 an hour jobs?



Start working your ass off to eliminate the upside down value, sell the cars as soon as you can break even, & then don't be a dumbass.

Viper GTS
 

Red

Diamond Member
Aug 22, 2002
3,704
0
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I won't be in the hole by having a 10k wedding... we are saving cash for it. And believe me, I would honestly have a $69.95 drive through wedding if I could, but my ol' lady wouldn't settle for that. Besides, I'll only do it once! I had the SC2 first... then she bought one. And then, I talked her into getting a Civic... so I'm not the whipped one =)
 

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