What are the credit implications of selling a vehicle short?

[SoundoftheSuburbs]

Hello! My credit history and endeavors in personal finance have been a roller coaster in the first ten years of my adulthood. From subprime to superprime and now stuck in deep subprime.

As of now, I am in an awful predicament. I have three vehicle loans with payments totaling $3,476 per month. Praise the lord, due to my household arrangement, I have minimal housing expenses, no insurance expenses, etc. so I still have some choices. My significant burdens are car payments and credit card debt that accrued due to a family health crisis in 2019 and 2020. I am currently in a debt management program and pay about $900 monthly on interest-bearing (but reduced) credit card debt.

I had no problem affording my car payments until the past several months. I entered into a relationship and took on a new career that resulted in a near-term pay cut. Previously, my vehicles were rented on Turo, which often put an enormous dent in any vehicle-related costs. Unfortunately, my significant other withdrew support for the Turo side hustle. My partner sold their vehicle and now drives one of the three cars without contributing to the monthly payment or insurance expenses. My partner does contribute to about half of the maintenance expenses which are high on their vehicle of choice. Losing Turo has meant that I now have to shoulder the burden of all of the payments and that has become increasingly untenable.

Our plan was to sell two of three of the vehicles, one of which still seems to have positive equity due to the market along with the lease equity I built up before buying the lease out last summer. As of now, I am thinking about keeping that vehicle because of its continued warranty status and general reliability. Maintenance expenses have been very very minimal on it despite the higher payment.

One vehicle has a bad CarFax due to accidents and I now have an agreement from the lienholder to accept a short sale for a reasonable price ($34,000 for a loan payoff of $50,000). My concern is that, obviously, one day I will need a new car. Will walking away short from a car loan mean that I will be shut out of the prime marketplace for 7+ years? This is a frightening prospect, as my newest vehicle is already four years old. I understand the tax implications of such an arrangement, but how much damage will that do to someone with several previous and current delinquencies mired in the mid-to-upper 500s anyway? I am ready to rebuild, but I don't want to do irreparable damage to my financeability for 7+ years over ~$14,000 either. I could certainly sell the newer vehicle with equity and keep this one.

[sccredit]

What does the agreement with the lender say about the deficiency balance?

I'd bet that the reporting will be be settled for less than owed. 

Frankly, who cares? You are already in "Deep Subprime" in your own words. Right now you have to figure out how to keep your head above water. IMO you should sell the one you have equity in as well. The car market is dropping and the economy is, arguably, fragile. 

You can rebuild from anything and you are in the deepest of it right now. If you have to take the hit, take it early and the climb out of the hole. I've been in your shoes and the quicker you rip the band aid off the better it will be long term.

[SoundoftheSuburbs]

I've got to update my signature because it's not at all current. Oops. But, I'm leaning towards selling both and moving on. I need to decide which first, however. A one car household is going to be a challenge.

[SoundoftheSuburbs]

I got seven dealer offers for the vehicle ranging from $28k to $35k. My top three offers beat the minimum that they had told me they needed. However, after the bid was submitted, the credit union stated that they were only going to accept $38,500. This seems to be an impossible target. I missed my appointment to sell today because of this. I'm not entirely understanding this process. This was originally floated as a possibility when I complained to them last year about how upside down the car was despite the hot used car market. I initially passed on it, but with it now consistently a burden, I'm ready to take them up on it. I view this account as high risk for repossession on my end, so I am not understanding why the original offer was rescinded. After a repossession, there is NO WAY it would fetch $35k. However, in my state, I would technically be on the hook for the shortfall after repo.

[SoundoftheSuburbs]

I was able to go back to the credit union and get them to honor a sale at $35,000. I got the closest VW dealership to my home to purchase the vehicle. Despite having an excellent relationship with another local dealership, when I arrived at the said dealership, they abruptly declined to proceed to say "we've been burned in the past." This was very frustrating, borderline humiliating, and caused me to lose the $300 sweetener the VW dealership initially offered me a couple of days prior.

My father's caregiver is interested in buying the vehicle I traded, but they want a 28% premium on what I traded it for. I'm not sure it's worth it for an out-of-warranty car with a bad carfax and almost 50k miles.

[sccredit]

Look at the positive, you are out from under the payment and got rid of an out-of-warranty car with a bad carfax and almost 50k miles

[SoundoftheSuburbs]

I feel relieved to no longer need to worry about paying $1,070 per month plus $200 per month insurance expenses on the car! We have to sell the other one but right now the other car has been in disrepair since December with the mechanic struggling to get it together. That's costing me $1,060 right there and I'm struggling with it. The newer car is our only working car right now.