Upside down in car loan!!! (almost inside out)

Anonymous · ‎07-07-2009

I have a 95 dodge grand caravan with 82,000 miles that is practically worth nothing (KBB $4,200).

I have three years left to pay on the loan. Payoff is over $14,000.

I have had it for three years, had a high interst rate, refinanced for lower, but still not great rate, but added a year onto loan. WHAT A MISTAKE!!!

Now the car is having major mechanical issues. We are paying loan and paying to fix.

Is there anyway out of this mess. All thoughts really appreciated. Credit now very good.

cw81 · ‎07-07-2009

You are in a difficult position almost 10k upside down unless you have a large down payment to offset that you will have to continue to drive the car and make additional payments. Dealers are not taking that kind of negative equity these days.

I don't know if you can get that much in incentives and rebates to help with the pay off. My suggestion is find some extra income to help pay it off. Good luck maybe someone else has an alternate solution.

dallasjetfan · ‎07-07-2009

Not sure if you can do much, but I will say taking on another loan will only make things worse.

Anonymous · ‎07-07-2009

@Anonymous wrote:
I have a 95 dodge grand caravan with 82,000 miles that is practically worth nothing (KBB $4,200).

I have three years left to pay on the loan. Payoff is over $14,000.

I have had it for three years, had a high interst rate, refinanced for lower, but still not great rate, but added a year onto loan. WHAT A MISTAKE!!!

Now the car is having major mechanical issues. We are paying loan and paying to fix.

Is there anyway out of this mess. All thoughts really appreciated. Credit now very good.

Unfortunately the only way out is to pay it off.

Mathmatically you have the following:

Vehicle Value $4,000

Owed $14,000

=================

So the question is, how can you come up with $10,000. Do you have other things you can sell to go toward this? What do you have in the garage, attic, storage, under the bed, in the closet, luxuries you can live without, things you don't use, don't need, can live without?

Then get a strict budget. Cut out all non-essentials. Turn the AC up (like 80) and the heating down (like 66). Switch to generics on all food and personal care products.

Pay your extra cash toward the van. Get another part-time job. Pay, pay. Once you pay the note down to under $8k, you can start shopping loans that might take some negative equity. And remember to shop the APR's, rebates and incentives. When you trade in, you'll get some value on the vehicle. If KBB is around $4k, expect to get no more than $2500 trade in. So if you owe $8k, get $2.5k trade, you'll need to roll about $5.5k plus TTL. That might still be a little high, depending on your credit and income.

The more you can pay down on the loan, then shop for a car with heavy rebates, incentives and pricing, you may be able to finance part of the negative equity in, but not all of it.

The important thing is to make sure you can get a really good APR. Then you need to budget to pay MORE than the (new) minimum car payment so that you pay off the negative equity portion of the loan as soon as possible so you don't end up in a similar situation down the road.