Trying to help a naive female friend

Chala · ‎12-20-2016

A friend of mine somehow was conviced that it would be a good idea to finance a 2006 Chysler with payments in the $350.00 area monthly for five years. The car has over 100,000 miles and is not in good shape. More importantly she cannot afford these payments and is in danger any day of getting the car repoed. I told her let them take it, but she crys and says she needs it to get to work 40 miles. Can you folks tell me what are her best options in this case? I am at a loss, thanks!

StartingOver10 · ‎12-20-2016

@Chala wrote:
A friend of mine somehow was conviced that it would be a good idea to finance a 2006 Chysler with payments in the $350.00 area monthly for five years. The car has over 100,000 miles and is not in good shape. More importantly she cannot afford these payments and is in danger any day of getting the car repoed. I told her let them take it, but she crys and says she needs it to get to work 40 miles. Can you folks tell me what are her best options in this case? I am at a loss, thanks!

Getting the vehicle repossessed is not a good idea at all. In fact, it is the worst way to go for your friend.

If she allows them to repo the vehicle or she turns it in herself, then it is the worst of all worlds - she has the payment and no vehicle. Getting rid of the asset doesn't do anything to reduce the debt. Yes, the lender can sell it, but as you point out, the vehicle is a 2006 Chrysler with over 100k miles which means she owes much more than it will get when the lender sells it at auction. Plus she will also owe the repo fees, default interest, and any other fee allowed by the financing agreement she has already signed.

What can she do to solve this problem? Hard to say because we don't know the value of the vehicle, the condition of the vehicle, the amount remaining on the loan (balance) and # of payments. Just looking at what you posted, it looks like she has a high rate of interest, How much did she pay for this Chysler and what is the interest rate and the remaining balance? This will help tailor the advice to her specific situation.

Chala · ‎12-20-2016

@StartingOver10 wrote:
@Chala wrote:
A friend of mine somehow was conviced that it would be a good idea to finance a 2006 Chysler with payments in the $350.00 area monthly for five years. The car has over 100,000 miles and is not in good shape. More importantly she cannot afford these payments and is in danger any day of getting the car repoed. I told her let them take it, but she crys and says she needs it to get to work 40 miles. Can you folks tell me what are her best options in this case? I am at a loss, thanks!
Getting the vehicle repossessed is not a good idea at all. In fact, it is the worst way to go for your friend.

If she allows them to repo the vehicle or she turns it in herself, then it is the worst of all worlds - she has the payment and no vehicle. Getting rid of the asset doesn't do anything to reduce the debt. Yes, the lender can sell it, but as you point out, the vehicle is a 2006 Chrysler with over 100k miles which means she owes much more than it will get when the lender sells it at auction. Plus she will also owe the repo fees, default interest, and any other fee allowed by the financing agreement she has already signed.

What can she do to solve this problem? Hard to say because we don't know the value of the vehicle, the condition of the vehicle, the amount remaining on the loan (balance) and # of payments. Just looking at what you posted, it looks like she has a high rate of interest, How much did she pay for this Chysler and what is the interest rate and the remaining balance? This will help tailor the advice to her specific situation.

The loan just commenced in September so it just started, so it's for five years so at $350.00 per month your looking at the bank getting $21,000.00 for that car which is rediculous. Not sure what she paid she does not even know. Her credit score is 400s at beat so rest assured interest rate is sky high. according to Edmunds....Dealer Trade-in $1,045 Private Party: $1,694 Dealer Retail: $2,792

StartingOver10 · ‎12-20-2016

@Chala wrote:

The loan just commenced in September so it just started, so it's for five years so at $350.00 per month your looking at the bank getting $21,000.00 for that car which is rediculous. Not sure what she paid she does not even know. Her credit score is 400s at beat so rest assured interest rate is sky high. according to Edmunds....Dealer Trade-in $1,045 Private Party: $1,694 Dealer Retail: $2,792

The main piece of info is missing: what is the purchase price?

It is a real shame that the dealership took advantage of her. Most of the purchases are AS IS. It is very tough to get these deals unwound unless the dealership committed fraud. Look at your state's statutes to see what constitutes fraud. Or have her contact a consumer attorney.

Remember the reason the payment is high is because of her high-risk loan category. Her score in the 400s shows she is a high-risk borrower. Are there items that were added to the deal to bring the price up such as a warranty or gap? If the warranty is decent keep it, but most of those warranties aren't any good. Read the warranty contract too. If it is no good, she can cancel it and get the cost applied to reduce the loan balance. Right now, she needs to keep paying every payment on time. Make the deal work for her if she can't get it unwound.

What she can do, if the deal is not fraud and is AS IS, is work on her credit. She can visit the rebuilding forum here to get tips on how to build up her credit. She needs to make each and every payment to the lender on time. Once she gets the loan amount to a reasonable balance, she can then trade in the vehicle for something that is better and if her score has recovered she will end up with a much lower payment. This is not a quick process. It will be much longer if she allows a repossession (could be 20+ years - don't go down that road).

Chala · ‎12-20-2016

@StartingOver10 wrote:
@Chala wrote:

The loan just commenced in September so it just started, so it's for five years so at $350.00 per month your looking at the bank getting $21,000.00 for that car which is rediculous. Not sure what she paid she does not even know. Her credit score is 400s at beat so rest assured interest rate is sky high. according to Edmunds....Dealer Trade-in $1,045 Private Party: $1,694 Dealer Retail: $2,792

The main piece of info is missing: what is the purchase price?

It is a real shame that the dealership took advantage of her. Most of the purchases are AS IS. It is very tough to get these deals unwound unless the dealership committed fraud. Look at your state's statutes to see what constitutes fraud. Or have her contact a consumer attorney.

Remember the reason the payment is high is because of her high-risk loan category. Her score in the 400s shows she is a high-risk borrower. Are there items that were added to the deal to bring the price up such as a warranty or gap? If the warranty is decent keep it, but most of those warranties aren't any good. Read the warranty contract too. If it is no good, she can cancel it and get the cost applied to reduce the loan balance. Right now, she needs to keep paying every payment on time. Make the deal work for her if she can't get it unwound.

What she can do, if the deal is not fraud and is AS IS, is work on her credit. She can visit the rebuilding forum here to get tips on how to build up her credit. She needs to make each and every payment to the lender on time. Once she gets the loan amount to a reasonable balance, she can then trade in the vehicle for something that is better and if her score has recovered she will end up with a much lower payment. This is not a quick process. It will be much longer if she allows a repossession (could be 20+ years - don't go down that road).

You are asking questions i will not be able to answer, i.e. warranty, gap, list price, she is a helpless cause i feel so bad for her. They will be talking the car soon as i stated above she cannot afford the payments, just thought i would ask if something could be done, repossession is enevitable. She says she does not have the info that we are asking her.

Anonymous · ‎12-20-2016

Did she buy this car through an actual dealership or one of those buy-here pay-here type of places? I know my now brother in law bought one at a buy-here pay-here place with similar outrageous terms before he met my sister. My sister has good credit so less than a year after he purchased the vehicle she bought him a new one, there was so much negative equity that there was no point in attempting to trade it in on the new vehicle. He took the car back to the place he bought it from and left the keys in the car and walked away from it. The dealer never attempted to collect from him, and simply resold the car to the next person. This of course would only be an option at the buy-here pay-here type of place...and even then it could backfire. It would also leave her without a car.

Does she have other significant debts? If that is the case, bankruptcy might be an option to walk away from the car, and get a fresh start. With credit scores in the 400's, her score would likely improve even with the bankruptcy. It seems like a very difficult position, I hope she is able to find a solution. Good luck!

StartingOver10 · ‎12-20-2016

Doesn't she have a copy of the contract? If not, that is just wrong. Maybe a good attorney can get that deal unwound due to the finance dept failing to provide a copy of the contract to the buyer at the time of purchase. I don't know.

I hope someone else has a suggestion.

Chala · ‎12-20-2016

@Anonymous wrote:
Did she buy this car through an actual dealership or one of those buy-here pay-here type of places? I know my now brother in law bought one at a buy-here pay-here place with similar outrageous terms before he met my sister. My sister has good credit so less than a year after he purchased the vehicle she bought him a new one, there was so much negative equity that there was no point in attempting to trade it in on the new vehicle. He took the car back to the place he bought it from and left the keys in the car and walked away from it. The dealer never attempted to collect from him, and simply resold the car to the next person. This of course would only be an option at the buy-here pay-here type of place...and even then it could backfire. It would also leave her without a car.

Does she have other significant debts? If that is the case, bankruptcy might be an option to walk away from the car, and get a fresh start. With credit scores in the 400's, her score would likely improve even with the bankruptcy. It seems like a very difficult position, I hope she is able to find a solution. Good luck!
it was a by here pay here place, and she is in lots of debt, thanks for sharing

Chala · ‎12-20-2016

@StartingOver10 wrote:
Doesn't she have a copy of the contract? If not, that is just wrong. Maybe a good attorney can get that deal unwound due to the finance dept failing to provide a copy of the contract to the buyer at the time of purchase. I don't know.

I hope someone else has a suggestion.

She does have a contract yes, maybe i can get her to dig it up

StartingOver10 · ‎12-20-2016

If she is in lots of debt, it may be a viable solution for her to file bankruptcy as one of the other posters mentioned. Naturally, we have no way of knowing. She might consider putting together a list of all of her assets, her debt and her income and speak to a few bk attorneys. Have her visit the bk forum to get information. It's a big step and not to be taken without a thoughtful plan. She certainly can overcome all of her debt then - except student loans.