topic Re: Car loan advice? in Personal Finance

Car loan advice?

Khughes06 — Mon, 08 Jul 2024 16:03:50 GMT

So long story short i have two collections coming off my credit one for 1260 in September, one for 2100 in september 2025. My credit score is a 580 currently. I had a voluntary surrender back in feb, i took my car to a delarship and they mentioned to me that there was an airbag deployment. I went in asking about trading in, i honesltly had no idea that there was an airbag deploy. They struck fear in me telling me the car was worth 5600 bucks and i owed 19k. I panicked got a second opinon and the next dealer said the same thing. so i went back to dealer one and got a new car they wouldnt trade mine in due to zero value for them and he mentioned i should surrender car looks better and can recover quicker. I WAS STUPID believed him and now i owe on a surrender 890 bucks which isnt bad. It was 9000 then i called capital one explained i bought off their auto navigator and was super upset that they did business with this shady dealership that in the last 3 months has gotten horrible reviews, mind you i bought it 6 months prior to that with all GLOWING reviews from the dealership. Capital one seemed worried when i mentioned contacting a lawyer, all of a sudden my 9k i owed turned into 4k, then 3.3k, now 895 to pay it off entirely and they will give me a paid in full on my credit report, they also dinged my credit for the surrender of the car and marked my payment late for 30,60 days which i was never late which confused me it was after the car was repod they did that and i made my payment then had it repod 4 days after my payment they picked it up 5 days late do theres no way it was even late when i surrendered.

Anyways, i am now in a car for 22.9% apr and the car is worth 18k with 20,500 miles and i owe 28000. I cant seem to get anyone to refinance me and i was told by the dealer wait 6-8 months you should be able to but with this high interest rate im not making any real dents in the overall amount going down any time soon..

So my questions are.

1. Should my credit bounce back within a few months of paying off this repo and it showing the loan as paid in full? Also with this collections coming off in two months for the 1260?

2. Refinancing, will this be obtainable? I feel like im sunk for the next 7 years on this loan unless i can raise my score. I was told i could refinance if i can come up with 3500 bucks and it would go from 22% to 16% but thats going to drain my savings and checking. I feel like if i dont tho because my ltv% is so off that it will be impossible to do later on like 4+ years down the road.

Any advice would be appreciated. I realize i have sunk myself and i want to climb out.

Re: Car loan advice?

FicoMike0 — Mon, 08 Jul 2024 16:44:49 GMT

wow, sorry to hear what you're going through. Sux to be you.

Can you make the payments on the loan? Since you're under water on the car, you might as well enjoy it. I hope it's a nice car.

I'm not real knowledgeable on the subject, but I would think getting a $28000 loan on a $18000 car would be unlikely, regardless of your credit score.

I don't get the air bag deployment thing. I know car dealerships are full of airbags, even when they have few cars. You didn't know it happened? How could you miss it? So, you weren't there to get it fixed.

I don't want to pile on, but have you figured out that going from being underwater to being deeper underwater, is the wrong direction to go? 22.9%? I never heard of a car loan that high.

Anway, we're all pulling for you.

Re: Car loan advice?

Slabenstein — Mon, 08 Jul 2024 18:14:27 GMT

@Khughes06 wrote:

So my questions are.

1. Should my credit bounce back within a few months of paying off this repo and it showing the loan as paid in full? Also with this collections coming off in two months for the 1260?
2. Refinancing, will this be obtainable? I feel like im sunk for the next 7 years on this loan unless i can raise my score. I was told i could refinance if i can come up with 3500 bucks and it would go from 22% to 16% but thats going to drain my savings and checking. I feel like if i dont tho because my ltv% is so off that it will be impossible to do later on like 4+ years down the road.

Any advice would be appreciated. I realize i have sunk myself and i want to climb out.

1. Repossession is a severely negative loan status. I expect it will hold down your scores significantly for many years.

2. From the numbers you've put here, it sounds like you would need to make a significant pay down of the negative equity before you would be in a position to refinance. Whether putting $3,500 towards that now to be able to refinance to a lower rate is a good idea depends on how not having that $3,500 for other purposes would affect you. You said it would drain your savings and checking, so if it's going to be taking what you need for regular expenses, in addition to your emergency fund, you probably wouldn't want to go thorough with this particular refinance. Taking money you'd need for, e.g., utility bills to pay down negative equity would be solving one money problem by creating another, probably more serious one.

As for general advice, if the reason you're wanting to refinance is that this loan and its payments are more than you can afford, then, from what you've said here, the only real solution that doesn't create further damage to your credit is, basically, to spend less and bring in more over enough time to attack the negative equity and bring it into the range where it fits refi lenders' LTV criteria. In your position, I would restrict my spending to the necessities, put all formerly discretionary spending towards loan principal paydown, look for side hustles/temporary second job/other income sources, put the money from those towards the loan, and maybe even sell some things I own, if I had non-essential items that would give me enough of a return. The idea would be to go all-in with clearing out the debt for a while, until it got down to where it was manageable, and then go back to living like a normal person.

Re: Car loan advice?

SouthJamaica — Mon, 08 Jul 2024 18:05:30 GMT

@Khughes06 wrote:
So long story short i have two collections coming off my credit one for 1260 in September, one for 2100 in september 2025. My credit score is a 580 currently. I had a voluntary surrender back in feb, i took my car to a delarship and they mentioned to me that there was an airbag deployment. I went in asking about trading in, i honesltly had no idea that there was an airbag deploy. They struck fear in me telling me the car was worth 5600 bucks and i owed 19k. I panicked got a second opinon and the next dealer said the same thing. so i went back to dealer one and got a new car they wouldnt trade mine in due to zero value for them and he mentioned i should surrender car looks better and can recover quicker. I WAS STUPID believed him and now i owe on a surrender 890 bucks which isnt bad. It was 9000 then i called capital one explained i bought off their auto navigator and was super upset that they did business with this shady dealership that in the last 3 months has gotten horrible reviews, mind you i bought it 6 months prior to that with all GLOWING reviews from the dealership. Capital one seemed worried when i mentioned contacting a lawyer, all of a sudden my 9k i owed turned into 4k, then 3.3k, now 895 to pay it off entirely and they will give me a paid in full on my credit report, they also dinged my credit for the surrender of the car and marked my payment late for 30,60 days which i was never late which confused me it was after the car was repod they did that and i made my payment then had it repod 4 days after my payment they picked it up 5 days late do theres no way it was even late when i surrendered.

Anyways, i am now in a car for 22.9% apr and the car is worth 18k with 20,500 miles and i owe 28000. I cant seem to get anyone to refinance me and i was told by the dealer wait 6-8 months you should be able to but with this high interest rate im not making any real dents in the overall amount going down any time soon..

So my questions are.

1. Should my credit bounce back within a few months of paying off this repo and it showing the loan as paid in full? Also with this collections coming off in two months for the 1260?
2. Refinancing, will this be obtainable? I feel like im sunk for the next 7 years on this loan unless i can raise my score. I was told i could refinance if i can come up with 3500 bucks and it would go from 22% to 16% but thats going to drain my savings and checking. I feel like if i dont tho because my ltv% is so off that it will be impossible to do later on like 4+ years down the road.

Any advice would be appreciated. I realize i have sunk myself and i want to climb out.

My advice would be to join one or more good credit unions in your area.

My experience with credit unions is that they are all looking to write car loans.

I don't know if you'll be able to refinance in the near future or not, but I feel that joining a few credit unions will improve your chances.

Re: Car loan advice?

Khughes06 — Mon, 08 Jul 2024 19:03:16 GMT

the car was in an accident prior they didnt tell me about it and i didnt ask about the carfax which i NEVER dont ask for it and the one time i slipped up so yes it is my fault

Re: Car loan advice?

Khughes06 — Mon, 08 Jul 2024 19:07:19 GMT

i also only make 42000 a year, thankfully my rent is only 300 from living with a great friend, my payment is 766 currently. I was just told my one main financial i could take out a 3500 loan to cover the refinance gap which would be as follows

current 23.8% apr 766 monthly

new would be 18.00 and 636 per month

the loan i would take out would be 3500 for 108 per month and i could pay it off quickly and would be less than the car payment with the new loan

capital one auto (vol surrender)

Khughes06 — Mon, 08 Jul 2024 19:22:23 GMT

Anyone had experience with cap one repo?

I had one that they took the car 19k org balance, then pushed to 9k, then 3300, then 895 bucks. They are telling me they can put it as paid in full on credit report. Would that help my score at all? also with the 2 late payments they posted on there they sent me a dispute form and was told to fill it out? does this mean they are willing to remove the late payments when 895 is paid?

Anyone else had this type of experience?

Re: capital one auto (vol surrender)

CreditCuriosity — Mon, 08 Jul 2024 20:03:41 GMT

No they will not remove those late payments. Although might help out with future auto loans and other things showing it paid off.

Re: Car loan advice?

Slabenstein — Mon, 08 Jul 2024 21:20:51 GMT

@Khughes06 wrote:
the car was in an accident prior they didnt tell me about it and i didnt ask about the carfax which i NEVER dont ask for it and the one time i slipped up so yes it is my fault

When you say it was in an accident, does it just have an accident reported in its Carfax history (not uncommon, doesn't really affect the value if the damage was repaired), or is it a rebuilt salvage vehicle? If the latter, that would restrict your refinance options. Many institutions don't lend on salvage titles, and those that do usually have pretty tight LTV requirements (e.g. 75% max, something like that).

Nevermind, I think you were replying to @FicoMike0 about the airbag deployment on your previous vehicle. If you use the quote button when you reply to a post, it's easier to tell who you're replying to and what the context of that post is.

Re: Car loan advice?

Anonymous — Mon, 08 Jul 2024 21:50:34 GMT

@FicoMike0 wrote:
22.9%? I never heard of a car loan that high.

@FicoMike0

There is a car dealer in the MI, IN, OH, IL area called Riteway (very much wrongway). A young acquaintance of mine before I knew him bought a Jeep from them with their in-house financing.

When I was able to get the full details from him including the monthly payment I was able to reverse-engineer it into a perfect 35.99% APR

Re: Car loan advice?

ptatohed — Mon, 08 Jul 2024 22:18:13 GMT

No offense but in your situation, I really don't think you have any business buying these $30k+ cars. I would have recommended a nice, reliable, several years old, no frills compact. But what's done is done. At this point, your goal is to reduce that interest rate. I can't see anyone refinancing you with that negative equity. Your best bet at this point might be to look into a personal loan. Even personal loans can come with high APRs but if you can find one that offers a measurable APR reduction over your current rate, that might be the best bet right now.

Re: Car loan advice?

FicoMike0 — Tue, 09 Jul 2024 01:07:36 GMT

@Khughes06 Thanks for clearing up the airbag thing. Looks like you're trying to do a refinance. Just make sure it's a better deal. Two loans at close to the original rate might not be much of an improvement.

Re: Car loan advice?

FicoMike0 — Tue, 09 Jul 2024 01:18:25 GMT

@Anonymous

I have no doubt there are rates that high, I've just never personally seen one.

Btw, I live in the mi, in, oh, Il (muck fichigan!)area and never heard of riteway. There are lots of sleazy buy here, pay here places around and I'm sure you can find 35% at one.

Here's a link to riteway in al,

https://www.ritewayautos.com/docs/vehicle_search.html

I've lived in sweet home Alabama too. Good bar b que.

Re: capital one auto (vol surrender)

FicoMike0 — Tue, 09 Jul 2024 02:08:58 GMT

How does that surrender work, anyway? You wave a white flag, then the car salesman breaks your sword?

Re: Car loan advice?

AndySoCal — Tue, 09 Jul 2024 02:32:42 GMT

There are some differences between a voluntary surrender and a volunteer repossession. The link below will explain it better than I can. In both cases the consumer is taking action to prevent an actual repossession. Yes the credit will take a hit

@Khughes06 Some of the information in the article may help you in your situation

I agree with idea of going to credit union and let them try to help you. You may get better results with a credit union.

https://www.nerdwallet.com/article/finance/voluntary-vehicle-surrender

Re: Car loan advice?

KatzNDawgs — Tue, 09 Jul 2024 19:45:33 GMT

I'm not sure why you dropped a 19k car loan like a hot potato and got a derogatory doing so, only to turn around to get a 28k new car loan with high interest rate? Could you not afford the original loan - what was the original APR and remaining length? Was the first car considered not safe to drive or had other high-expense issues to fix?

I don't know your budget or how much you have to save monthly, but as for advice on what you can do now - if you can afford the down payment to decrease interest rate without impacting your ability to pay other bills I would do so. If that would overly stretch you so you get other lates and can't rebuild savings, then I would instead suck it up and wait for a better time to refi.

Cars pretty much always depreciate due to age and inflation, I find the most financially savvy way to deal with cars is to get a used reliable car at a decent price, keep up with maintenance, and drive it for many years rather than constantly upgrading to newer cars.

Re: Car loan advice?

FicoMike0 — Tue, 09 Jul 2024 23:14:21 GMT

I just put $200 in the old buggy. The most important thing is regular oil changes. If you get it done at the dealership they do a pretty good inspection for free. They give me a printout, shows wear on each tire, all sorts of stuff. Last year they told me it was due for some phase of preventive maintenance, for $800 or so. Turned out to be new air, cabin, and transmission filters, transmission fluid and plugs. I threw in New wipers. I upgraded from platinum to iridium plugs, I really wanted plutonium. Less than $100 in parts. Pretty easy except for the transmission filter, that was a wrestling match.

Re: Car loan advice?

IsambardPrince — Thu, 25 Jul 2024 23:05:39 GMT

@FicoMike0 wrote:
wow, sorry to hear what you're going through. Sux to be you.
Can you make the payments on the loan? Since you're under water on the car, you might as well enjoy it. I hope it's a nice car.
I'm not real knowledgeable on the subject, but I would think getting a $28000 loan on a $18000 car would be unlikely, regardless of your credit score.
I don't get the air bag deployment thing. I know car dealerships are full of airbags, even when they have few cars. You didn't know it happened? How could you miss it? So, you weren't there to get it fixed.
I don't want to pile on, but have you figured out that going from being underwater to being deeper underwater, is the wrong direction to go? 22.9%? I never heard of a car loan that high.
Anway, we're all pulling for you.

Even if he could miraculously get a good credit score overnight somehow, nobody is going to refi a car that is worth $10,000 less than what you owe on it because the loan to value ratio isn't going to be favorable when they acquire the debt.

When you sign a high interest car loan, you're hosed approximately 1 nanosecond after you finish signing it, with a granularity of 1 nanosecond.

Not buying a car with CASH is the worst situation you can possibly be in if you can't get a better interest rate (in this environment) than about 6-7%.

They dial the interest rate up into the 20s with a 580 FICO because they never expect you to pay. They expect to take the car at some point, sell it again, and sue you for a lot of money even though you have no car while you're driving an old rustbucket that you borrowed from a family member, which is what you should have done to start with while you saved money.

By the time they sell the bad debt to a collection agency, it's already accumulated so much additional interest that they'll make a profit even if they only sell it at 30-40% face value.

Re: Car loan advice?

IsambardPrince — Thu, 25 Jul 2024 23:07:54 GMT

@KatzNDawgs wrote:
I'm not sure why you dropped a 19k car loan like a hot potato and got a derogatory doing so, only to turn around to get a 28k new car loan with high interest rate? Could you not afford the original loan - what was the original APR and remaining length? Was the first car considered not safe to drive or had other high-expense issues to fix?

I don't know your budget or how much you have to save monthly, but as for advice on what you can do now - if you can afford the down payment to decrease interest rate without impacting your ability to pay other bills I would do so. If that would overly stretch you so you get other lates and can't rebuild savings, then I would instead suck it up and wait for a better time to refi.

Cars pretty much always depreciate due to age and inflation, I find the most financially savvy way to deal with cars is to get a used reliable car at a decent price, keep up with maintenance, and drive it for many years rather than constantly upgrading to newer cars.

Everyone knows people who do things that defy all logical expectation. Who knows how someone else's mind works?

You don't know their budget? Well that makes two of you.

Re: Car loan advice?

IsambardPrince — Thu, 25 Jul 2024 23:32:17 GMT

@FicoMike0 wrote:
I just put $200 in the old buggy. The most important thing is regular oil changes. If you get it done at the dealership they do a pretty good inspection for free. They give me a printout, shows wear on each tire, all sorts of stuff. Last year they told me it was due for some phase of preventive maintenance, for $800 or so. Turned out to be new air, cabin, and transmission filters, transmission fluid and plugs. I threw in New wipers. I upgraded from platinum to iridium plugs, I really wanted plutonium. Less than $100 in parts. Pretty easy except for the transmission filter, that was a wrestling match.

Most of the time the dealership misses obvious things during the alleged inspection because they're not paying a real mechanic to do the oil change and they just put down on the inspection that the car is fine and charge you $120 for an oil change that's ~$50 at Walmart and then you get the car back with a leaking power steering rack that they didn't comment on while it was up on the rack.

Then you end up with car shops that break things on the vehicle or just lie about something being broken when it's not.

Or assuming you have an honest service department that actually looks at the car, they may suggest repairs that the dealership won't give you a good deal on. "Hey buddy, your tires are old and worn out. Here, we have tires for $250 a tire." and so yeah, you can get tires for $1,000, or drive over to Walmart and pay $400.

Why on Earth would you buy the best tires they make for an old worn out car?

The only reason I ever went to dealers for oil changes was that some of them used to run them as a loss leader. Bring your Ford by and we'll do it for $20. And so I came in with a 20 year old Ford and said "It's a Ford."

But realize that $120 dealer oil changes are just a huge profit center for the service department. A jug of dexos oil is $19 at Walmart. An AC Delco filter is $4. Having Walmart use that after you buy it is $25.

The dealers almost never have real mechanics working stuff like this. The service advisor at Chevy (back when they had lower prices) told me when I had a coolant flush that "This is something we give to a bay tech, not a mechanic." and so I looked at the job openings. The guy doing the coolant and oil changes was starting out at $16.50 an hour, the mechanics were making about double that.

The dealership says an engine air filter costs $69.95 and a cabin air filter costs $79.95.

I just get them on Amazon and do them myself with a screwdriver. Engine air filters cost $10.50 for AC Delco OEM part, and cabin filter is a bit more at like $18.

The other dealership oil change gotcha is putting 3 month 3,000 mile stickers on the window right after filling up your engine with synthetic oil that can go a lot longer. They want you back in there quickly so they can give you another bill and drum up more work for the shop that may not be done, but that they can inflate to the moon. Most dealers have people paying about $500 a year for glorified oil changes when most people only need to pay $50-100.

Some of these newer cars, like the Toyota Prius, help the Stealership rip you off by doing crap like lighting up a mysterious "service required" message that doesn't tell you what's going on, then the dealership will stick you real good for "Maintainence I" or something and that turns out to be an oil change and a couple of filters for $400. And the stupid car is sending you text messages to your phone.

Sometimes, there's a grain of truth to the 3,000 mile oil change. They make modern engines so poorly and cheaply a lot of the time, or with low drag piston rings, that the engine is an oil drinker from the get go, and if you're not checking and topping off, some of them guzzle a quart of oil every 800-900 miles now and it's a brand new car. And they say there's nothing wrong with it and it's your car and no takesy backsies.

They used to make engines out of real metal and for longevity, not gas mileage. Which still saves you money if you can find one out there that was made to those standards. Now they use plastic everywhere and you get head gasket failure on a 50,000 mile engine that wasn't neglected because that's what a Ford is now. The EPA and CARB force you to drive around in badly designed vehicles that have the personality of a toaster, and the thing will blow up halfway into the payments a lot of the time.

The only people who can get fun cars are the people who pay $10,000 in CAFE fines built into the stupid thing.

Then when the original owner gets rid of them because the car is always in limp mode and costing them repairs and time off work, predatory lenders find people like our OP here and sell them on a bad car that was already failing, and give them high interest rates.

The suspension on some of the more affordable cars these days breaks in like no time really because in Europe, they drive on the left of the road and in America we drive on what's left of the road, so after 50,000 miles or so the struts are broken and making turns and hitting bumps is like trying to control the car while it's bobbing up and down like you're sharing a waterbed with a babboon that's been doused in itching powder.