Negative Equity / Maturity Date

[Anonymous]

I need some advice...

My auto loan with Santander is due to Mature on 6/30 at which time I will still owe $5,800. I won't have the funds to make a lump sum payment. The car is basically worth nothing at this point. It's a 2006 Chrysler Pacifica that has seen better days. I think KBB is at $700. 

We just purchased our first home and I was also approved for an auto loan for $15,000 with a 7.3% APR with my local credit union.

I don't really want to roll over any negative equity and get myself in the same situation with the new car. 

I need some advice....do I take the new auto loan and do a voluntary repo of the Santander car? I know I will still owe and take a hit to my credit. Do I take a personal loan and pay off the Santander?

I'm at a loss for options. Any feedback/advice would be helpful.

[Anonymous]

I am really confused as to how ou will still owe $5,800  how is that possible?

Did you defer payments? If so then it will mature later.

[Dalmus]

Since you're willing to make payments on a personal loan AND on your new auto loan, I'd probably rather roll the negitive equity into the new auto loan and just make double payments.  The problem with that is the credit union is unlikely to allow you to add the balance of the old loan to the new one if that puts you into a net negative equity on the new (used) vehicle.

If you're getting a 7.3% rate from a credit union, you're likely to get a 15-20% rate from a personal loan. And then pay as much as you can each month OVER the monthly payment to get out from the interest debt.   But that would be preferable to having Santander repo your vehicle.  And Santander is known to pull the trigger QUICK on repos if you miss a payment.  Whether its voluntary or not, a repo on your report will hurt you pretty badly, and could get your wages garnised, and then you'd be paying far more per month than adding that $5,800 to new loan.  Not to mention they would add repo fees, storeage fees, legal process fees, etc etc.  You'd probably end up owing them $9,000 rather than the $5,800.

[Anonymous]

Thanks for the reply...

I contacted Santander and asked them what happens when my loan matures. They said I can keep making the monthly payments until it is paid off. I could pay more and hopefully have it paid off in 6 months. 

This may be the best route to go. Anyone have experience with Santander after loan maturity? I know they are a sneaky group and want to make sure they don't come back and request a lump sum.

[Anonymous]

Whatever you do, do not let this become a repo and trash your credit.

I highly recommend not financing another car until you've dealt with this mess.

You just bought a home which is a huge commitment. They suck up money. You need an emergency fund. Scary time to be adding another $15k of debt when you're not even out of your old car debt yet.

I would hobble that Pacifica along as long as you can. Preserve it by supplementing with bicycling, public transportation, uber, or renting a car if you need drive a significant distance for a weekend or whatever. If the Pacifica is not running, spend $1k on something cheap to get you around for a while.

I say this all having seen so many folks here work wonders on their credit, buy a home, cars, renovations, furniture etc., and stretch their paychecks to the absolute max. One unforeseen repair or jobloss and it's all falling apart.

[Dalmus]

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@Anonymous wrote:

Thanks for the reply...

I contacted Santander and asked them what happens when my loan matures. They said I can keep making the monthly payments until it is paid off. I could pay more and hopefully have it paid off in 6 months. 

This may be the best route to go. Anyone have experience with Santander after loan maturity? I know they are a sneaky group and want to make sure they don't come back and request a lump sum.

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 I would just make sure that there are no other consequences, such as a higher interest rate, penalty fee, etc.

[Anonymous]

You are right....

Talked w/ my husband and we will pay off the Santander within the next 6 months. It drives and gets me from point A to point B. 

Then we will keep as a junker for the kids and then I will be in a better place to take on a new auto loan.

Thank you all for the imput. I need to talk/text it through.