Do I turn back in my Harley Davidson ? Need help with loan questions, interest ectPLEASE

[Anonymous]

My husband and I have a Harley. We owe $20k on it. The current worth of it is $15k. Monthly payments are $500 a month and we have 60 s left. We just don't and can't afford anymore. Here are our 2 options we are considering:

1. Buy a 12k Harley and our payments for 60 months would be $260 with putting 5k (the amount we have to put down for trade in, they are giving us 15k for Harley) with a 10-17% loan rate

2. GEt a loan or cc between that 10-17 rate of 5 and TRY to sell it and take a loss. Key word being TRY...

3. How badly does it hurt your credit to just turn it back over. 

Please give advice. No bashing me please! 

[Anonymous]

If I understand you:

1.  You have $5,000 cash in hand that you could pay down toward another purchase

2.  You would get $15,000 trade-in from Harley if you buy another, less expensive Harley

3.  You are considering just "turning in" the Harley.

First, if you have $5,000, why not sell the current Harley and use the $5,000 to pay the deficiency (sell for $15,000 plus pay $5,000) to get out from under the Harley payment and NOT buy another payment ($260).

Second, if you are able to get $15,000 trade-in for the Harley, you should be able to sell it for more than that.  Trade-in is usually a wholesale value and not what you would expect to sell it for to a private party.

Third, there is no such thing as just turning it in.  You borrowed the money and bought a Harley.  There is a bank who backed the loan.  If you turn in the Harley, they will auction it off and it may go for less than $15,000.  Then they will pursue you for the difference.  Plus this will hit you as a repossession and charge off and you will be responsible for accruing interest and penalty on the deficiency amount.

I highly recommend you sell the Harley for what you can reasonably get and just pay the difference out of pocket.  Don't buy another bike and have another payment.  If you don't have another payment, then you are saving $260 per month which means you can replenish the $5,000 deficiency in about 19 months....be out of that debt and not worrying about it.

If I missed on something....please advise.

IMO 

[Jazzzy]

Hi Melgil...

I'm a bit confused on one point. Do you have the $5k you are short? Or are you saying that you would have to borrow it?

As to #3...turning it back over...be aware that if you do that, you could still be held liable for the difference. What sometimes happens is that whoever holds the financing sells it at auction (cheap) or sells it themselves (also cheap), and they then sue you and get a judgment for the difference. So, by turning it back in, you could still have to pay the difference. Also...it will reflect negatively on your credit.

Have you talked to whoever holds the financing about any sort of settlement if you could sell it? Would they consider eating some of the difference rather than get it back?

What I would NOT do is buy another Harley. I would try to sell this one.

(And...as to bashing...not from me. I volunteer at a crisis center at Sturgis...I love Harleys.)

[Anonymous]

Sorry for the confusion...I would have to borrow the 5k which has been approved and will cost me $140 for 42 months. The only reason we considering trading is because we have had the Harley listed for a year now trying to sell it. It is a high performance bike and it is not moving. So now based on those items...what do you suggest? Thanks!

PS. Thanks Lynette for not bashing! I know some peeople might just see this as ignorant. We truly just want out of the bike but finding the only way might be to trade for a lesser bike that is in high demand. Thoughts? ! 

[Anonymous]

Melgil - let me apologize if my post appeared in any way as a bash...it truly was not meant to be...possibly huried typing came across that way.

IMO, unless you really need a bike, I would opt for the $140 payment vs. the $260 payment IF you can sell the bike for the $15,000 reasonably fast.  If you are saying that you are having a hard time selling it for $15,000 and the $500 payment is becoming a burden that cannot be sustained, then by all means trade it in and roll the negative equity into the bike downgrade for the lower payment.

Then try to sell the newer bike (downgrade) for as much as possible and borrow the difference at that time, if any.  But first and foremost protect your finances and credit....

Good luck and Happy Thanksgiving!

[Anonymous]

txjohn...you were great in all your responses! No one was bashing me! I was just worried that people might start telling me I was stupid for wanting to get in a different bike. We decided to try and sell the bike and just take a 5k loan for the negative equity. It is a very hard time to try and sell a bike. we have it listed on Craigslist. I appreciate all of your thoughts and answers!! Have a wonderful Holiday!

[Anonymous]

"First, if you have $5,000, why not sell the current Harley and use the $5,000 to pay the deficiency (sell for $15,000 plus pay $5,000) to get out from under the Harley payment and NOT buy another payment ($260)."

txjohn, you know this is the only advise that makes any sense. I would try to make sense of the other options just to be nice.

Melgil, if you cant afford a $500 bike payment then you cannot afford a $260 bike payment. Swapping one depreciating asset for another to save money sounds rediculous. You know what to do.

[Anonymous]

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@Anonymous wrote:

"First, if you have $5,000, why not sell the current Harley and use the $5,000 to pay the deficiency (sell for $15,000 plus pay $5,000) to get out from under the Harley payment and NOT buy another payment ($260)."

txjohn, you know this is the only advise that makes any sense. I would try to make sense of the other options just to be nice.

Melgil, if you cant afford a $500 bike payment then you cannot afford a $260 bike payment. Swapping one depreciating asset for another to save money sounds rediculous. You know what to do.

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OP seemed to understand my posts...but to clarify for your benefit:

1.  OP does not have $5k cash, but can borrow it for a $140/mo payment.

2.  OP stated they are having difficulty selling at the $15,000 price....therefore it would be better to trade down vs. end up with a repossesion.

3.  I did advise to sell the bike and pay deficiency....cash if in hand, or borrow the deficiency if no cash.

4.  If OP cannot sell the bike, then the $5k deficiency loan is moot point.

5.  If OP cannot sell bike, and cannot afford the $500 per month payment and will soon end up in repossession, then it is obviously a much better situation to trade down, and take the lower payment at $260 which is more manageable.

6.  If OP does trade down, then I suggested they put it up for sale immediately and find a buyer that they can sell to within $5,000 of what they owe, and then they can end up with only a loan for $5,000 deficiency and $140 payment.

My advice was a "step it down" to manageable levels, eventually to get rid of the bike and end up only having the deficiency to deal with.

[Anonymous]

Understood. However, I think the loan for the deficiency is the only likely scenario that will have her actually put the negative purchase behind her and move forward. If they purchase another bike it will just be ridden and depreciate like the other. Just roll from one problem to another.

People that can't scrape up $5k probably shouldn't purchase $20K toys. Hopefully she will follow your advise and get back on track. Sorry if I sound too blunt but it's reality talking. People just dont want to hear it.

[Anonymous]

Biclindrico...I guess I should have explained myself better and should have expected someone to come in here and be "blunt". I can afford the bike. I have been affording the bike. I don't WANT to anymore. I guess I should have made that statement. I was trying to figure out what was the best thing to do to lower our monthly payments. My dream would be for the bike to sell for 15k and I will eat the 5k at $140 a month or heck...I can pay it off in 10 months at the payment I am making now. My other alternative was to lower the bike payment by trading down and getting a much older bike. I am REALISTIC! The problem is...the world is not. People are not just buying 20k Harleys. So that is why I was trying to figure out the best option in this time and day of state that we are in. I personally, thank God, am doing fine. This was just something I wanted to get rid of to start saving an extra $500 a month.