Need to get rid of car

[Erin28]

Hey Everyone, I need some help and guidance. I have a 2015 Hyundai Sonata with 40k miles...Car is in excellent condition. I NEED to get rid of this thing..The finance company SUCKS, I make $460.00 payments each month and it's like the balance never goes down. I have some serious negative equity in this car. What are my options? The good news is, the car isn't in my name at all, it's in my husband's. LOL...But, I don't want to just let it go and totally ruin his credit, he has the better credit of the two of us
(although his isn't GREAT either). His EQ is really low right now, EX and TU are in the mid 600's.  I would like to somehow trade it in for something alot cheaper, so that I can have smaller monthly payments. Any help?   Thanks! 

[p-]

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Erin28 wrote:...I have some serious negative equity in this car. What are my options?...I would like to somehow trade it in for something a lot cheaper,

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 You don't have many options, if you want to keep your credit and avoid a repo judgement:

   1. Pay it down faster by getting a second job or cutting spending elsewhere.  Then you can sell it or trade it, or keep it.

   2. Sell it, and write a check for the difference.  Assuming you have or can find a way to earn/get that cash.

   3.  Trade it for something cheaper.  But the math on that sucks.  Want to know where you'll end up in that case? Do this:

Determine your monthly payment target.  Plug it into an Amortization Calculator for 60 months at your current interest rate.  Note the total principal paid at 60 months.  Now look at what you owe on the Hyundai, and then look at blue book mid or low trade value.  Take the difference and subtract it from the total principal you got when you amortized.  That is your out-the-door price for a car, including tax/title/license.  Assuming you still qualify for the same rate.

My personal advice is to go with number one.  Cut all unnecessary expenses and get some added income.  Eat beans and rice and bust your ass for a year.  Keep improving your credit.  And twelve months from now, refinance it with penfed at 1.5% or just sell it and buy a $3,000 beater.  I say this because I assume if you could do number two you would have already, and #3 just prolongs the problem.  Think you're upside down now?  Imagine where you'll be six months after the next trade.  

I know that's a hard thing to do and it sucks.  Believe me, I've been there.  I just wrote a check to get rid of a truck I really liked, but it was the smart thing to do.

Good luck!

[p-]

What's the principal, term length, and interest rate?  What's the blue book low trade?

[Erin28]

Principal is 18,700...6 years (I've had it a year)..Int rate is up there, like 17%....Rough trade in is 10,400..OMG, I could die right now. 

[Erin28]

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@p- wrote:

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Erin28 wrote:...I have some serious negative equity in this car. What are my options?...I would like to somehow trade it in for something a lot cheaper,

---

 You don't have many options, if you want to keep your credit and avoid a repo judgement:

   1. Pay it down faster by getting a second job or cutting spending elsewhere.  Then you can sell it or trade it, or keep it.

   2. Sell it, and write a check for the difference.  Assuming you have or can find a way to earn/get that cash.

   3.  Trade it for something cheaper.  But the math on that sucks.  Want to know where you'll end up in that case? Do this:

Determine your monthly payment target.  Plug it into an Amortization Calculator for 60 months at your current interest rate.  Note the total principal paid at 60 months.  Now look at what you owe on the Hyundai, and then look at blue book mid or low trade value.  Take the difference and subtract it from the total principal you got when you amortized.  That is your out-the-door price for a car, including tax/title/license.  Assuming you still qualify for the same rate.

My personal advice is to go with number one.  Cut all unnecessary expenses and get some added income.  Eat beans and rice and bust your ass for a year.  Keep improving your credit.  And twelve months from now, refinance it with penfed at 1.5% or just sell it and buy a $3,000 beater.  I say this because I assume if you could do number two you would have already, and #3 just prolongs the problem.  Think you're upside down now?  Imagine where you'll be six months after the next trade.  

I know that's a hard thing to do and it sucks.  Believe me, I've been there.  I just wrote a check to get rid of a truck I really liked, but it was the smart thing to do.

Good luck!

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Thanks for your reply...As bad as it sucks, it's reality..Gosh I could kick myself and my hubby in the azzz right about now!!!! 

[p-]

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Erin28 wrote: Thanks for your reply...As bad as it sucks, it's reality..Gosh I could kick myself and my hubby in the azzz right about now!!!!

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Don't be too hard on yourself.  We've all made those sorts of mistakes.  At least I have.  I was paying 670 a month for a truck that wasn't my daily driver, and had 19k left on it when I finally wised up and got rid of it.  I whine about it a bunch in my journal on this forum.

I don't think any lender will roll that much payoff into a new loan, unless the rate was exploitative.  I'd cross that option off the list.

If you were able to qualify for the penfed rate of 1.49 on a refi, your payment would be 320.  I think your best bet is to buckle down, pay it down, and improve your credit.  Once you are solidly over 700, contact penfed for a membership app, a refi, and a credit card.  Even if that t means a year of writing letters and eating top ramen, it's worth it.  Of course, at the end of that year, you might decide that you don't want a car payment any more.  I woudn't blame you.

Good luck!

[Erin28]

Thanks so much!!! If by some miracle I'm able to get my score up that high, do you think Penfed would refi being upside down on this car????

[Creditaddict]

Do you have  carmax near you? They will give you higher than any dealer trade in offer... They also work with banks that will finance cars of their lot up to like 125% or something to eat negative equity... I don't completely recommend doing that if your only goal is cheaper payment... you just need to refi.

Has your husband joined any credit unions and started talking to them about it... if they would take 110-115% on a refi that would only leave you a couple grand upside down, could you borrow the difference on a credit card or something?

[p-]

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Erin28 wrote: Thanks so much!!! If by some miracle I'm able to get my score up that high, do you think Penfed would refi being upside down on this car????

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Their calculation won't be based on trade value, it will be based on sale value at a dealer, and they have an allowance for a gap on a refi.  But you would be wise to pay it down a bunch as you rebuild your credit.  

If you are in the mid six hundreds, you don't have too far to go to qualify.  What derogatory items are holding you down now?  Are you carrying credit card balances?

[Erin28]

No.... Don't have any CC balances.... Mostly late payments, Only one in the past year....thin credit file, Ive just now been able to get cards such as VS, Amazon, Overstock.... Have a Capital One card that I'm waiting to report....No collections.... Just this car with perfect payment history... Mortgage (that's the one with the one 30 day late this year) , another installment loan (husbands truck... Perfect history) EQ score just sucks really bad. I actually did a 3 month extension on mortgage (to get ahead... car payment is killing us) and they have me reporting as late... So it brought EQ wayyyy down. Contacted them and it should be fixed the next time they report... So hopefully that will give a bump.