Major negative equity / upside down

[ScottL]

Before I get lectured, I know I made a mistake. But I want to learn from this mistake and never do it again.

About 2 years ago I bought a car from CarMax. Was trying to find someone smaller with better gas mileage and get out of my big truck since I drive alot of miles.  So I bought a little Lexus, had it only about 6 months and regreted it from the first week.  Although I saved alot on gas, it was just too small. I have 3 kids and it just never worked out. So on an impulse, i went down and traded it in for an SUV with 3rd row seats.  At the time, I was upside down on the car about $4500 that was rolled over.  In an effort to keep my payments affordable, I had to get something a little older with higher miles. So I got a 2007 Honda Pilot.  for about $12k.  Then once TTL, negative equity was rolled in, I financed about 16-17k I believe.

Its now been 13 months since I bought the Pilot. And although it served its purpose and got me out of the small car. I am beginning to hate it. Recently I have had to replace a few things and its broken down twice because of radiator and something with throttle body.  I have 140k miles on it now and afraid things will only continue to go out. Not to mention, i really regret not having a truck.

That said, I went to dealership over the weekend and they will only give me $4k for the Honda. Which means, I am upside down about $10-$11k!!!! 

Other than just keep it for a few more years, what are my options? Is there anyway to fix this or get out of this without me forking over $10,000?  I do not have that even if I wanted to.

[Anonymous]

The base clean retail on that vehicle at NADA is about 10K at that mileage, so that dealer lowballed you, but they will always do that. 

If you have cash to cover some of the difference, you can probably private sell it, pay the difference, and then go in and get a car with no negative equity. How's your cash flow situation? 

Your only other option is make large payments to get out of it more quickly then trade it. You'll get a better trade value when you don't owe money on it. 

[sccredit]

When trading vehicles on a regular basis there comes a time when you have to suck it up and deal with one of two options -

Option 1 - Suck it up until the vehicle is paid off

Option 2 - Write a big fat check

I've been in both scenarios, neither is a good one.  

Unfortunately most finance companies have advance guidelines - say 120% LTV.  In order to comply with that and bury $10k of negative equity you would have to buy a $50k vehicle, put down 100% of TT&L and then carry the $10k.

You could try a lease but even then I'd almost guaranty that you'd have to write a big check.  

[Anonymous]

Would a "heavy maintenance" Honda visit help. I own a 2005 and just spent $2600 on it and it runs (edit for spelling error. Arrgh) like a top. I asked them to "fix" anything that needed it and boy, did it need fixing.

[ScottL]

at this exact moment, i do not have alot to cover the difference. But if I could really get $10k that would change things of course. I just never thought I would get that much even if selling outright myself.

[Anonymous]

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@ScottL wrote:

at this exact moment, i do not have alot to cover the difference. But if I could really get $10k that would change things of course. I just never thought I would get that much even if selling outright myself.

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My Honda dealership will finance big repairs. Just a thought, if you think that is a possibility.

[Anonymous]

Cars are never a good deal

[Anonymous]

Same boat here.  Traded in positive equity Lexus for a beater Honda.  Negative 5k right now and trying to budget to snowball payments for a newer hybrid. 

While my Honda SUV served it's purpose last year, my new job with commuting is killing my pocket book...loading up reward points tho LOL

Ive succumbed to using an amortization calculator to see exactly how much more per month I should drop at my 7% APR to pay this sucker off.  Seems the best deal IMO since leasing isn't an option as scores are under the magical 720.

Theres always refinancing and snowballing payments that way, but while it lowers payments, more time and money gets tacked on and I don't like that. 

[Anonymous]

Hondas are known to be reliable and well engineered and can easily last for well over 200k miles. Unless you know of some major item that is close to failure, I would think you are not in danger soon.

At somewhere around 100 to 120k miles, it is a good idea to change the timing belt, and while its apart, the water pump and thermostat.  Also, the spark plugs and associated ignition equipment.

If you can keep up with the regular maintenance items like transmission fluid service and front and rear differentials (if AWD) then it would be pretty much oil and tires and brakes.

I owned a 2004 Pilot EX and then a 2005 Acura Mdx Touring and liked both of them, especially the Mdx, it had a good array of options and features and very comfortable.  I could get 24 to 26 mpg on a trip with them.

I suggest holding off on another trade until it gets paid down further, and hopefully, your scores will be much higher then too.  It seems like another trade now will just make the hole deeper.

GL

[Dj4Money]

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@sccredit wrote:

When trading vehicles on a regular basis there comes a time when you have to suck it up and deal with one of two options -

Option 1 - Suck it up until the vehicle is paid off

Option 2 - Write a big fat check

I've been in both scenarios, neither is a good one.  

Unfortunately most finance companies have advance guidelines - say 120% LTV.  In order to comply with that and bury $10k of negative equity you would have to buy a $50k vehicle, put down 100% of TT&L and then carry the $10k.

You could try a lease but even then I'd almost guaranty that you'd have to write a big check.  

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 Wait, how did you do that?

  I have to bury $4093. I have since re-fi'ed my current car so the pay off will be lower, therefore reducing the negative balance. How would I calulate that properly?