Made a huge mistake

[Anonymous]

Good Evening,

Hello everyone my name is Nick and I have been "viewing" myFICO for the past two years just haven't started to post until today. I come to you all this late evening for advice on how to turn on auto loan situation around. I am a 24-year old college student working for Hilton and driving for Uber/Amazon. In January of 2015 I obtained my first car, a little 2009 Nissan Versa through a local credit union. Everything was great and I was only paying about $160 a month. Fast forward a year later, I got a little cocky and tired of the manual locks/manual windows/no bluetooth or AUX cord. I started a company in November of 2015 selling the new "hoverboards" and by January business was booming. I went into a car dealership in the area come January and inquired about a car. They informed me that they could get me into a 2012 Lincoln MKS for $20,000 with 42,120 miles on it. At the time I still owed $6,000 on the Nissan Versa but I decided what the hell and did it anyways. Now I am struggling to pay a $600 a month car payment and my girlfriend who is a dancer (stripper) makes good money, but I feel terrible making her pay for my mistakes by helping me with the loan. I would like some honest advice on either steps I can take to fix this or how I can do anything at all.

Total Amount Financed: $26,231.79
Annual Percentage Rate: 17.96%
Monthly Payments $597.70
Capital One Auto Loans

Current Credit Score 597 (Transunion)


Thank you very much for your time it is greatly appreciated.

Nick

[Gmood1]

If you could boost your scores a bit. Maybe become an AU on a parent's CC account? If you can get up around 670/680 score. You could refinance the loan down to 2.49% or so. That would drop your payments to $465. Still to high fir my blood, but much better than $598.

[StartingOver10]

It is a good thing you recognize your mistake - believe me, most of us have BTDT.

There is a way to fix it. 

First, what is your monthly gross income and current debt? The answer to this question will determine if it is wise to keep the vehicle or to sell it. 

Is your new hoverboard business still going well or did it drop off a bit? 

Do you have a way to generate extra funds for additional down payment?  Selling things around the house - or otherwise getting a lump sum.

I agree with the prior poster - getting  your score up and refinancing is a good method. If you could simultaneously put down a lump sum so you finance less, that would be better to get your payment into a reasonable range.  

[Anonymous]

Good Afternoon,

Currently I am making minimum payments on my credit cards with a total credit limit of $1,700 combined. All maxed out.

The Hoverboard business falled apart in late February. Currently I am making $1,700 gross income before Uber/Amazon and $2,500 a month when you combine 

If I may ask what does BTDT mean?

Thanks again for all your help.

[Anonymous]

"BTDT" is Been There, Done That...  

Since you've got 5 years left in this loan with the monster interest rate, refi should be your goal.

More than half of your monthly payment is pure interest at this point, and will be until mid-2017.  At this point, one year in, you've knocked out only about $3,200 of your original principal.  Basically, you've paid off your TT&L and are making a small dent in your vehicle itself - right now, probably only about $1k or so off of that $20K you started with.

Right now you need to be focused on increasing your score to the point where refi at a much better rate becomes feasible.

The earlier question about becoming an AU on someone else's card (a parent, perhaps) is a good way to boost your scores a little, and you might want to look into Capital One's rebuilder credit cards.  If you have any collections or other things lurking in your report, try to deal with those as you can as well.  Scores will improve, and lenders will be more willing to look at your refi deal.  You may want to invest in a report that will give you your Auto-Enhanced FICO scores too, since they may be a little better if your Nissan account was paid on time throughout its life.

Unfortunately, you are already using Capital One as your lender, so you cannot refinance with them.  This means that any applications will be with other lenders, all of whom tend to do hard pulls for approval before telling you what rate they might offer you.  You can look at advertised rates, but as the prior poster said, those are typically not offered until you cross that 680 score line.

A good plan, a little time, and you should be able to get there.

[impactplayer]

Well, the first step to fixing this is admitting there is a problem. So you are doing a great job already! Here are my thoughts on your alternatives:

1. Do you have positive equity in the car? By that, I mean is the car worth more if you sold it than the remaining balance you owe on it. If so, my advice is to sell the car immediately before it depreciates any further and before you continue paying so much interest. Even if you don't have positive equity, but are close to a break even point, I would consider getting rid of the car. 

2. If you are too far from having positive equity in the car, I would look into refinancing as the posters above have stated. However, your scores will not give you the best rate right now. While normally I would say to try and rehabilitate your score, I think that will take too long and I am very concerned with your APR on the auto loan. If one of your alternatives is already asking your girlfriend to pay your payments for you, it may make more sense to see if she would be willing to cosign with you on a refinancing application (assuming her credit is better than yours). This may enable you to get afloat at a more reasonable rate. Bear in mind, if you are unable to make the payments, she will be responsible as the cosigner. That is a risk she has to be willing to take. 

[Anonymous]

Try and get your scores up by paying down your debt and then try and refinance the auto.  That is an outrageous amount of a payment for what you borrowed!  Once you can get your score over the 600-620 threshold, you should be able to get a much better apr.  Not the best but it will make a big difference.  I thnk selling would result in a loss of funds that you don't have.  Keep trying and don't ever give up.