Yesterday my friend asked me to take her car shopping, and since I actually enjoy car shopping I was glad to go along. I didn’t know how big of a mess this was going to be before I went.
Basically she bought a car as a payment shopper 3 years ago and ended up financing for 6 yrs at 420/mo. She owes about 14.5k on a car that trades for 7700. The car has 78k miles on it and she still has 3 yrs of payments on it.
She drives alot for her job so she puts a ton of miles on it. She can’t keep the car for 3 more years till it’s paid off cause as many miles as she puts on it, it probably won’t last that long.
So basically the car is 7000 dollars upside down and probably won’t hold together till it’s paid off and she really does’t have the money to make any major repairs to it.
She could probably get maye 9-10k if she found the right buyer selling it outright but she doesn’t have the cash to cover the difference to pay off the bank and doesn’t know if she can get a personal loan to cover that difference. So that almost means if she wants out of that car she needs to trade it in and roll the balance into the next loan which is a terrible thing to do.
I told her if she can get a personal loan to cover the diff. to sell it outright and find a cheap low miles used car in the 5k range like a cavalier or escort and finance for 36 months get it paid off and get that personal loan paid off and start over again, but she says she can’t get that loan. I don’t think that a bank would finance a new car in the 14k range for the 21k or so she needs because there isn’t enough value to back the loan and she really doesn’t need to be spending 20k on a car and roll another 7k in negative equity into the deal.
I don’t know how people get into these messes but I’m about out of ideas on what she can do.
Doesn’t sound like she has many options. She should probably just plan on keeping the car she has now. What car is it? It very well may go 200,000 miles with little problems. At $420 a month for 6 years it better by something really nice.
03 mitsu eclipse gt v6 auto. stickered for about 24k and I ran the finance numbers. Msrp + tax + plates and title financed for 6 yrs is about 420 per month.
I didn’t know her back then so I have no idea if she had any trade equity when she bought it but she did tell me that loan was through chrysler financial at a pretty high interest rate but I didn’t bother to ask how high.
I just sold the same exact car an it took me over 6 months just to get a reasonable offer. She should just run it into the ground. Her financial situation will only be worse if she tries to get out of it.
I bought a 23k car, was 1 g upside down on my trade, nothing down, financed for 6 years and I only pay $341/month. I’m not sure what the hell she did, but she defenately got :gaysex:
I would think that 03 has a lot of miles left on it yet, I had a 91 and that thing ran and ran and …(well the timing belt busted at 53K whoops) I had like 195,000 miles on it before I sold it before leaving Cali to move here…
this happends a lot, its called biting off more than you can chew. How is the car gonna fall apart in 3 years if its an 03? that would only make it 6 years old by then. I think she should deal with it for the next 3. get the truth out of her, see if she is saying all the stuff because what she really wants is something else. people will tell their friends all kinda crap to make themselves look better. Buying a new car for many people is a bad investment, especially if you like to get new things often. The most important purchase you make in life should be a house and if you are deep in debt because of cars, you are FUCKED. If she doesn;t have the money to repair it, she doesn’t have the money to take a 7K hit either. when u buy a car ur first concern should be how much is it gonna cost to get it fixed. A lot people think they have the money for a volvo or a bmw until they can;'t get parts for it at pepboys. I think she should sit down with a financial advisor to get a better idea of what her options are. A part time job is another option too.
I financed my altima through the bank when I bought it. It came to around $333 a month. After a few months of that, I transferred the remaining balance onto my credit card ~$12K. I got a 0.9% interest rate on the remaining balance of the car and the payment on the card is only ~$150 a month. So basically, see if she can transfer the remaining balance of her car to a card and get a much better interest rate which she can pay more towards the balance of the car instead of interest and get herself out of the big shitty cycle she is in right now.
Lower interest rate will help her immensly… but self control is a key here too. Redneck truck is right… she should try to finance the 03 car for a lower interst rate and either drop the payment or shorten the length of the loan. If her car is only 3 years old and it is a Mitsubishi… she should just keep it until it is paid off or she will be in worse debt than she is now. A Mitsubishi will last her a while longer. If she is going to be beating the crap out of a car for her job… maybe her job would offer her a work car to drive around… She needs to look into her other options…
I was always told to not take a travelling job where you had to use your own vehicle… it’s not worth it.
I’m not trying to explain what happened or how I got my payments… All I know is I was a 20 yr old kid buying a brand new 2003 Dodge Dakota and I pay $341/month… How it got to that point is none of my business, maybe my excellent negotiating skills :booty: :jerkit:
i bought out against a loan with return on part of my retirement… so basically i went from 4.9% which is what i bought it at to 2.9% and got the interest against my 401. if she can swing any sort of loan that will let her buy out of the existing loan and drop the time it takes to pay off, that’s her best bet…
If that is the best rate she could get, I don’t know if this will work, but I regularly get 0% intrest for 6/12/18 month credit card deals from citi bank. If she is good at switching the balance every time the deal is up she could pay no intrest for the remaining 7 grand. This is similar to what redneck truck was saying
Take advice from me, I bought a 2003 eclipse in the end of 2002, then in the end of 2004 I got a 2005 trailblazer, now I have my mustang. I am so in debt because of cars its not even funny. Tell her to keep the eclipse. I love my mustang like no other but I miss the shit out of my eclipse. The dealership saw my ass coming and took me for everything. (thanks century 3 chevrolet, i owe ya…fuckers)
My payments on my mustang are 405 a month, which isnt too bad considering what I had to get out from under, but I did it in a not so politically correct way. My perfect credit is now shot to shit, but the way I see it is, if I didnt have perfect credit, century 3 chevy couldnt have ripped me off like they did, and id still be driving that little black eclipse and have it half paid off by now. I have a sick obsession for buying cars. Someone shoot me!
I’ve worked at quite a few dealerships and they love people like this girl. She probably did ZERO homework before she walked into the dealership, paid way more than invoice (and probbaly didn’t even know what the amount was), she probably didn’t have loan from her own bank lined up and she probably bought the overpriced rust-dust-fab package too. If she had a trade in, they made any value of it go away in the paperwork so she got owned big time. Worst yet, she doesn’t like the car any more and wants something completely different (flavor of the month car shopper).
Sadly, this stuff happens everyday.
Since she is so upside down, she’s going to have to keep the car until it’s paid off. No way should she try to get out from under it. Even though it’s a Mitsu (probably the worst Japanese car company there is) the thing will certainly last another 3 years and 100,000 miles provide she maintains the car properly. Once the car is paid for, she should have learned her lesson well enough to NOT buy another new car.
New cars/trucks are the worst investment a person can make. PERIOD. That goes double for young people (just out of school trying to pay bills, furnish an apartment and get a career on track) who should be saving towards a house which is the best investment a person can make. Unfortunately, young people are loathe to take advice from us older folks who have been there and done that so they end up making the same mistakes countless other people have. Most vehicles do down in value while most real estate goes up. You wouldn’t invest in a chronic loser stock, would you?
Another way of saying all that is that depreciation is a bitch so why not let some other fool take the hit and buy a 2 year old car that has leveled off in value? It’ll be new enough to be reliable but used enough to be affordable. Internet loans are all over for next to nothing if you have good credit and with the recent sales war by the big three there are crap loads of used cars out there for insanely low prices. Sure it’s not a new car but so what? Unless you’re so vain that you just HAVE to get the newest and hottest car out on the market that month any previously owned vehicle will be good enough.
If you care about this person you will advise her to tough it out and not make the same mistakes on her next vehicle.