SETTLE ON A CURRENT AUTO LOAN?

[shalane85]

My ? may sound strange but I need some help. My DH's car( 2003 Buick Lesabre) which we pay $384 a month has alot of mechanical problems. It needs alot of work and the problem is we are tired of paying on a car that is always breaking down every couple of months. The pay off amount on this subprime loan is $9,900 and this car is only worth maybe $4k. I dont have the money to pay it off but I was wondering if I could settle on the loan with the finance company for less than the $9900. Has anyone ever heard of this? Is it possible? Because I'm almost ready to give this car back to the bank but I don't want a repo on my credit.

Did I mention our interest rate is 24%? And I think the transmission is about to go out! I need help!

[Creditaddict]

you could settle on the loan after they repo the car and sell it at auction and come after you for the difference.  They will usually settle on that difference, but I have never heard of a car loan company taking less than the car note while it's current and letting you keep the car.

[mgs2010]

No, they are not going to accept a settlement. Why? Because you signed a contract stating you will pay so much for the car at 24% interest rate until it is paid off. You can't have your cake and eat it too. If you let the car go they will sell it at auction and subtract the sale amount from your loan balance and you could possibly settle on that remaining amount. If auto loans settled and let you keep the car, I'm sure a lot more people would do that....

[shalane85]

Im not much of a cake eater (I'm on a diet ) and my transmission just went out on this car. I knew they were selling me a lemon when I bought this car but we were desperate. Im sure Im not the 1st in a situation like this and I certainly wont be the last. I dont know how much it cost to replace a transmission but I know its not cheap. With the car only worth $3k I figure it would benefit them to settle on the balance instead of losing money at auction. I mean really how much can they get for it now. It is not worth holding on to anymore. But thanks for your positive insight and opinions.

FYI: A very close friend of mine was in the exact same situation last year and her loan company settled with her because if they repoed the car they would lose money. I just wanted to see if anyone else has been in this delimma or know of someone who has. Thanks!

[Watchmann]

A bit off topic, but my wife inherited her dad's 2004 Buick LeSabre when he passed away in Sept. 2008 and it has been a wonderful car.  No issues whatsoever.  Don't know what the history or mileage of your vehicle is but it certainly sounds like it is a lemon.

[Anonymous]

You should try seeing what kind of trade-in value you may be able to receive at a dealer. Worse case scenario, the dealer may be able to take that $4,000 difference and have it applied to your new loan. It's a bad situation, but it may solve your immediate issue.

Message Edited by Cyan007 on 01-23-2010 12:17 PM