How to Escape a High Interest Car Loan with Negative Equity

Stephen Snyder is the founder of the After Bankruptcy Foundation and author of the site Life After Bankruptcy. Check out Life After Bankruptcy for more articles, resources, and support to get your life back on track after bankruptcy.

What do you do when you’re upside down on a car loan?

Let’s assume that you have a high-interest car loan that you’re upside down on (you owe more money on the vehicle than it’s worth). How do you turn this situation into something better?

STEP #1 – Determine how upside down you are.

First call your lender and get an accurate payoff. The payoff is what you owe on the car. Here’s what you need to know to get the correct payoff:

If you purchased your car, the payoff is simply the total outstanding debt you must pay off in order to get a clear title.

If you leased the car, you need to ask for the remaining payments, PLUS the residual value (the amount you can buy the car for at the end of the lease, if you decide you want to purchase it), and any early termination fees.

If you know for sure you’re trading in the car, cancel all extra insurances (e.g., credit life, disability insurance, extended warranties) you might have bought when you signed your contract. To cancel them, you’ll need to call the dealership you bought the car from and sign cancellation forms for this refund to be applied to your loan. The refund can take anywhere from two to six weeks to reflect on your payoff with your lender.

If you buy your next car from the same dealership where you bought the car you’re trading in, they can give you an immediate refund and apply it as a down payment on your new loan.

STEP #2 – Find out what your car is worth.

Here are my top three resources to find the most accurate trade-in value for your car.

  1. The most accurate website for appraisals is kbb.com (Kelly Blue Book). Click on, “Used car values by make and model.” Then enter in all of your vehicle’s information… remember to be accurate. Click “Good” for condition even if you think your car is in excellent condition. The amount given for “Good” condition will be what the dealer will offer you 95% of the time.
  2. You should also go to Edmunds.com. Click on, “What’s your car worth?” Once you enter all your vehicle’s information it will show you the trade-in value.
  3. If there’s a CarMax® dealership close to you, you can drive your car there and they’ll give you a free appraisal. And, even though their appraisals are free, I’ve found them to be very accurate.

STEP #3 – Use car manufacturer rebates to get the best deals.

To best explain the rebate strategy, I’ll use an example. Let’s assume you’re $5,000 upside down on your car—believe it or not you do have options.

Your best strategy is to find out which new car manufacturers offer a rebate equal to or greater than $5,000.

Car manufacturers offer rebates all the time to stimulate sales. You can use the rebate to remove the negative equity on your existing vehicle so you don’t end up carrying that debt into the next car you finance.

Again, KBB.com and Edmunds.com are good resources to research the auto manufacturers that offer the highest cash rebates in your market area.

If it were me, using the example above, I’d look for rebates higher than $5,000. That way I could get into a new car with potentially no cash out of my pocket…as long as the dealer knows how to structure the deal properly.

Another way to achieve a bigger discount is to ask the dealer if they have “aged” inventory. If a car has been sitting on their lot for 60 days or longer, that dealer is really motivated to discount that car just to stop paying the high floor plan fees. Every car that doesn’t sell within 60 days is just taking up space and is preventing the dealer from replacing it with another car that will sell quicker.

STEP #4 – Determine which car manufacturers will work with you.

Get on the telephone and call the local car dealerships. But don’t talk to just anyone in the car dealership…and you especially don’t want to talk to a car salesman.

You want to speak with the finance director. If you just ask for someone in the finance department you might end up with a part-time person with no real knowledge. You need someone who can tell you if you have a snowball’s chance in “the hot place” to finance a new car with the rebate you need.

If they begin asking you permission to review your credit reports/credit scores you know what to say, right?

“No, thank you. I just need to know your experience in getting a person with FICO® credit scores of X, Y, and Z financed?”

You don’t want to apply for credit. At least not yet.

All you need to know is if there’s a high likelihood you’ll get financed with your current credit scores.

You don’t need a promise written in blood that you’ll get financed. Just reassurance you’re not barking up the wrong tree.

STEP #5 – It’s all about your credit scores.

Be sure to pick a car manufacturer that uses your highest FICO credit score to make a lending decision.

By using the steps outlined in above, you not only have a way to get rid of the negative equity in your existing car, but you’ll be able to finance a NEW car at a low interest rate through a good mainstream lender with a lower monthly payment and with little or no money down.

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112 Responses

  1. jared cruickshank says:

    hey im 21 and have been in a 29.5% interet auto loan for 2 years out of the 5 year term my car was 12000 plus 11000 interest. i needed it ,what could i do ? my status has changed since then. ive worked my credit up to 600 which isnt great but its better then it was i still owe about 13000 and the car is worth maybe 6000 what do you suggest

    • mnc says:

      Jared, without knowing more details about your situation it is hard to say what is the best course of action.

      Some of the things that might be worth exploring would be the possibility of refinancing the loan, using a low-rate balance transfer offer from a credit card or continuing on with your payments as scheduled.

      Refinancing might be difficult due to the loan to value ratio, as I am not sure many lenders will take this on. With your credit score at 600, I am not sure how many attractive balance transfer offers you are receiving but this could be an option.

      Depending on the amount of credit card debt you have right now, that may not be the best option either. As such, you might be best sticking with the current loan and trying to save as much as possible to pay it off.

      • shanonp15 says:

        I have a 2009 Hyundai Santa Fe that I bought from DriveTime. They want $18,000 for a $6,000(kbb value) car. I’ve had the car financed for about 7 to 8 months now and I’m not wanting to pay for a car 3 times over. I was wondering if there was anyway that a finance company could help me out with this outrageous price. I have like a 683 FICO score and my interest rate for this vehicle is outrageous I think it’s like 21% APR. I’m hoping somebody can help me know what my options are with this vehicle and what directions I can go with it because I don’t want it repoed and I don’t want to pay that outrageous amount for a vehicle that’s not worth it. Please if you know anything to help with this situation let me know any information that could help me out with this.

        • Karen says:

          I was hoping someone would of replied to you. I am in almost the exact situation. ’07 santa fe pay off is $16000 something and it’s worth $6000 with a $24 APR. I want out of this situation…

        • Marcus says:

          So what did you end up doing? I just ran into a similar situation. Same company got me a car a year ago been paying 400 a month for a year and my payoff is 14000 and the car isnt even worth 7000 I am seriously about to do a voluntary repo by the end of this month if i dont find an alternative option. I cant get refinanced credit is around 630 and it’s to much negative equity for anyone to want to help. Please help

    • irene conner says:

      i am in the same high intrerest rate the car cost 11000 i paid 12000 and still owe 11000 at a 25 precent intrest rate is there anybody that can tell me how can i get out of this loan the car is now worth about 5000 please tell me something or someone that can help.

      • Migdalia Presley says:

        Dismantle the car and take back to the bank.

        • David says:

          Hi every one ) I’m in the same boat I’m 44 !! Very first car and managed to get a supper sweet 2012 focus ) Man was I hurting for that car …. I did no any thing and got stuck with a 24 % on a 18000 loan its been 3 years at 460 month !! I found that if you can get a month a head of your payment you can keep there compond interest low!! Every one all most all leander change interest dayle … So if you get a head of the loan you can knock you principle down fast I like the i deal I read earlier about doing home work and catch a dealer ship and try to use the rebate to pay the negative equity !! A least you can jump in to the next ride with a lot lower interests ) Just focus on try to pay any bill you might the earlier you can pay bill the better it help you score!! 3, Years a go i was driving a 84 Toyota held to gather with chicken wire… got bless and land great job tell … When I feel in to my loan I didn’t have a 4 60 fico score and in three years buy paying bills early IV brought my score to 700 So hang in their nothing last for ever !!!

  2. RBJ says:

    Hello, everywhere I go I get an interest rate of 17% or higher for I car. The best deals (if you can say that) is
    -2007 Ford Mustang with 19,000 miles
    int:17%, payment of $497 for 72 months

    -08 Toyota Corolla w/700mi (brand new)
    int:18.5%, payment of about $360 for 75 months

    -03 Dodge Dakota w/about 50,000 miles
    int:23.5% payment for 72 months

    -I’ve also applied for a Capital One blank check that I’m waiting to hear the results

    I understand that my credit score is very low (low 500s), but I need a car, am ready to reestablish my credit and can afford a car payment. Would it be smart to enter into one of these loan agreements? I don’t have any current open revolving accounts. I know that I will have to pay alot to finance, but are they okay deals for a person with my kind of credit. My ultimate goal is to trade the car in after about a year and a half. I love to hunt and fish alot, and I need a truck for that. I am really stressed out about this. I have a couple of questions:
    1) Should I pick one of these cars just to establish credit
    2) If I do, will it be easy to trade it in on a more expensive truck (trucks are typically more expensive right?)
    accounts

    • mnc says:

      While I cannot provide you with direct financial advice, I would think it might not be in your best interest to take one of these vehicle loans.

      Given that you mentioned that you can afford a car payment and the payments you listed are in the neighborhood of $400-500 per month, I would suggest that you try to pay yourself that “car payment” for a few months into a savings account to ensure you truly can afford it.

      Once you realize that you can in fact afford that payment, you should have close to a few thousand dollars saved up. At that point, I would look for a reliable used car for a few thousand dollars and avoid a car loan completely.

      Since you plan to trade the car in after only a year and a half, I really don’t see it being worth paying that kind of interest for a vehicle. As much as you love to hunt and fish, I don’t think it is a wise financial decision to overpay for an expensive truck. In a quick search at cars.com I was able to find a wealth of trucks such as a Ford Ranger for well under $5000.

      As a recap, I would not pick one of these cars just to establish credit. Instead I might look to apply for a store credit card or even a secured card if you have trouble getting approval as that is a much lower risk method of establishing credit. As for the trade-in on a more expensive truck, you will most likely not have a problem trading something in but don’t plan on receiving much of anything.

      • Jimmie says:

        Getting into a store credit card or a secured card will not do much to raise his score above 610 if he is in the low 500s. A Car loan might be his best option. You are always told to get credit cards. These do not carry a high rate so you are essentially working your way up extremely slowly. In about 5 years, making all your payments and only charging 20% on the card and paying it off regularly, you should get to a 650, if you are lucky and you have several of these cards. That strategy worked about 10 years ago but Equifax and Experion caught on to that and reformulated the calculation to weigh more on heavier loans, like cars and houses.
        The loans are bad loans though and they Government should outlaw these “loansharks” for charging people in a bad situation THREE times the worth of the vehicle and just create a higher interest payment until the Original value of the car is paid. I think it should be CRIMINAL to take advantage of people in desperate situations, but Banks in this Country do not care.

    • lyn says:

      Instead of getting into a lengthy car note, even though the Corolla monthy price is not half bad, I would save and purchase a used car outright for about 2000-4000. Some lots will finance you in-house. I am currently in a contract paying $496.11/month. I have had to pay for repairs also. I wish I had had someone to tell me not to get into this contract.

  3. Nikiva says:

    I am so dishartened. I purchased a C240 mercedes from CARMAX a year and a half ago. I still owe nearly 16k and the car is only being valued at 8k.More importantly I think within the next 6 months I will be putting out a large amount of money to keep it running safely. My interest rate is 10% and my credit score is fine.But, how do i get out of this car without paying a crazy car payment? It is plausible? A lexus dealer told me today I had to put 2500 down and pay nearly 700.00 a month car payment that is over 200 more than I am paying now. HELP? I feel like i’m screwed in the long run if i keep the car and i’m screwed now because im putting out a down payment jus a year and a half later and increasing payments so much?uggghhh. Is there anyway to make out ok?

    • mnc says:

      Nikiva – just a suggestion but you might want to set your sights a little lower than a Mercedes, BMW, Lexus, etc. Have you considered a used Honda Civic? Toyota Corolla?

      Why do you think you will have such large repairs in the next 6 months? Depending on the nature of the repairs, you might be better off getting it fixed and keeping it.

      If you sell the C240, do you have the funds to pay the difference or are you looking to roll that into a new loan? That is where you get in trouble because then you are not only paying for the new car but also paying for a car you no longer have.

      Without knowing more about your situation, I would likely recommend you either keep your current car and fix it or sell it and buy a cheap used car that you can afford.

  4. Shale says:

    I have a car that I owe 8,660 dollars on, but it is worth 750 acorrding to an appraiser a 2002 nissan sentra. What do I do to get rid of it, without having it repossed and making my credit worse. Keep paying for it even though it’s not worth it. If i trade it in it has negative equity. I have a family now and I need a bigger vehicle. I do not know what to, please give me some advice. I feel like if I am paying for something every month it should at least be worth it. The car title is clear and it has no major damage structuaral or mechanically. I have been paying for this car but never refinanced and I was late a quite a few times because of lack of work. Help I feel so frustrated and every body keeps saying something different, I just want a vehicle to fit my family in. Thanks

  5. SG says:

    I want to fiance a car is it wise to do so If I plan to purchase a home in 1 year. Is that no considered a major purchanse and could impact a home loan? Thanks.

  6. mnc says:

    Shale, while I cannot give you specific advice on what you should do I will give you some points to consider.

    How many kids do you have and is the Sentra your only car? Unless you have more than 2 kids I believe you can fit in the Sentra – sure it won’t be the most luxurious or comfortable but it can be done. Is the Sentra your only vehicle?

    Since it sounds like the car is mechanically sound, I would lean towards keeping it and continuing to pay it off. If you start the process of rolling debt owed on a previous car into your next car you will be digging yourself a bigger hole.

    Along those lines, I would not personally recommend financing a new car and taking on new debt within the year of purchasing a home. That would certainly be considered a major purchase and it is not worth risking the home loan in my opinion.

  7. SG says:

    Thanks for your advice, it is sad to know i paid so much for the car and it is worth that now. It does have to problems that i need to fix, and the cost might end up being more than it is worth. I do have three children and we all fit, it is a tight fit, with my husband 5 exactly. We have 2 cars one is paid for and every time someone comes to visit we have to take too cars if we drive out of town we have to rent. Everyone says it is not worth it to pay off for that car, are you saying that bascially that seems to be the most efficent choice, despite it all. I really appreciate your advice. Can I refiance in my name and a get a home loan only in my husbands name although both our salaries together (which is why I am working on my credit because it is the one that holds us behind) would approve us for more money on our home loan I was told. Thanks again.

    • mnc says:

      Regarding the car…I would lean towards paying it off only because I would question whether you are really going to be able to get a better car without incurring a considerable amount of additional debt. It is true that it might not be worth it due to the car not being worth that much money but it might make the most financial sense given your alternatives.

      Also, where did you get that the 2002 Sentra was only worth $750. Or did you mean $7500? I just did a quick look on kbb.com (Kelly Blue Book) and used zero options with 125,000 miles to get an idea and the retail value was $6780. Even the trade-in value in fair condition was listed at about $2300.

      Do you have to have 2 cars in your family? I’m not sure what your other car is but you could consider selling the Sentra and only using one car for awhile. However, you will need the cash to make up the difference on the loan at the time you sell it if you’re not rolling it into another loan.

      With regard to the home loan, you can get a mortgage in only your husband’s name but I believe if you want to use both salaries for purposes of qualifying that they will be checking your credit as well. I would certainly recommend consulting with a mortgage lender or financial planner for their advice on the best way to approach that. Speaking for myself, I would not be comfortable taking on debt that close to getting a mortgage.

      Try not to get overwhelmed with everything and don’t rush into any decisions.

  8. SG says:

    Adding my name to the quick deed later (for the home loan, I was told that is possible, but is it good)… is all that necessary in your opinion?

  9. SG says:

    I went to carmax (750, ripoffs) and I used kbb (I answered their questionares 3,995 i believe it was in fair condition which it is), the car is in fair condition. We do have 2 cars. We need 2 cars, having one would not make a difference as the other is paid off. Insurance is not bad on either. Thanks so much for all your advice, it helped to ease my mind a lot. Now I know what I really need to think about and do, which is for best financial aspect of it all is to keep this car and pay it off sooner than later I hope. Thank you so much… SG

    • mnc says:

      I’ve found CarMax to usually be a little low but generally in the ballpark so that seems surprising.

      I don’t know your situation but I would try to get any additional income that is possible and throw it at that car to pay it off ASAP. You never indicated the interest rate on your loan but the quicker you can erase the debt the better.

      With three kids it might be difficult to get a 2nd job but try to look at it from all angles. Maybe you have things around the house that you can sell, etc. Any extra money that can come in is a good thing.

      Looking at the big picture, do you have a budget in place? Are you living below your means? Are there any luxuries that you can eliminate to free up more money? What is the rest of your debt picture like? These are all things to think about as you prepare to conquer this debt with the car.

  10. SG says:

    oh BTW the car has 73,000 miles on it. SG

  11. SG says:

    Thanks again, believe me I have looked at it from all aspects and finding another job with three kids youre right I wonder how I can do that, I have always tried to work during the holiday seasons and try to schedule that around my husbands schedule, but hey I will take your advice and leave the rest in GOD’s hand. I never try to liv e above my means, and right now I am living as much as I can below them. Thanks again.

  12. Torrie says:

    I have a ’04 Dodge Stratus that has been given me problems since the 4th day I had it. I purchased this car in May of last year. It is hard to trade in with so much negative equity. I owe 10000 but it is worth 2800. I am having major problems with the car and although I pay 336 a month I am kicking out over 300.00 every month for repairs and yes I have a warranty but it does not cover anything that messes up. I am a single parent with 2 boys and a mortage and if I trade the car in my payment will be a little over 500.00.

    • mnc says:

      Torrie, what are you using to determine that your car is only worth $2800? Doing a quick search on Edmunds.com I see 2004 Dodge Stratus listing for anywhere between $9000 and $11000. While I didn’t look up the KBB value, I have to imagine it is worth more than the $2800 you mentioned. Have you visited a CarMax to see what they would offer?

      Also, what kind of repairs are you having done every month for $300? Are these real problems with the car or are you possibly visiting a mechanic that is taking you to the cleaners?

      • Torrie says:

        I took my car to several dealerships including Carmax and that is where I got the 2800.00 from. Every other dealership told me the same also. My mileage is 70,000 plus I have major engine problems. I no longer have a warranty and when I did it did not cover anything. I have been told by Carmax and 2 other dealerships that I have major engine problems, my heat, A/C defrost has went out 3 times and is now out for the 4th time. I purchased the car on a Tues. and Sat it had to be towed back to the dealership. 2 weeks later my my A/c, heat went out for the 1st time. I take my car to the Dodge dealership and my alternator to the emissions, gas leak, etc has gone wrong with the car. The car has let me down so many times and I always keep up the maintence. I even took the car back to the dealership where I purchased it from and the told me the car was garbage and they fired the salesperson. I’ve contaced the BBB and that did not work either. What are my options?

        • mnc says:

          Torrie, it sounds like you might have a lemon on your hands and I would suggest you take some time to review the lemon law for your state. A quick Google search turned up the following resource:

          http://www.carlemon.com/

          Did you purchase this car new or used? With engine trouble, you can likely get a new engine for roughly $1500-2500 from what I have read. While not ideal, that might allow you to sell the car for more money if you want to get out from it or at least make it more drivable in the meantime.

          • Torrie says:

            I tried to get help under the lemon law but it has to be a brand new car. I brought the car used with over 37,000 miles on it. I wa thinking about getting another engine but the dealerships tell me not to put anymore money in the car. I thought about getting another engine but that is not the only thing that needs to be fixed. As of this morning the car started doing a thing of its own again so when I leave for lunch I hope it will crank.

          • mnc says:

            It might be worth talking to the dealership where you purchased the car to see if they would be willing to work with you on getting this lemon off the road and putting you in something similar for close to the same money. You mentioned that they fired the salesperson so it appears that they know they sold a bad car, maybe they will be willing to win a good customer.

  13. Marlon Jr. says:

    I can’t afford to make my montly payments anymore on a 05 mits. lancer evo viii. the payoff for the car is 34000. if i sell it i can get around 20000. can i use the negative equity to finance another car?

    • mnc says:

      Have you run any numbers to see what type of payment you can afford? While I wouldn’t necessarily discuss that with the dealer, you should be informed about what you can and cannot afford.

      Given that you would be rolling roughly $14,000 of debt into the financing on a new car, you need to be sure you can afford that otherwise you will be in the same boat.

      For instance, even if you were to buy a $6,000 used car you would have a loan of $20,000. Can you afford the payment on a $20,000 loan? First determine how much you can honestly afford and that should help show you your options.

    • SMC says:

      Marlon, I am in the EXACT same situation. EVO 8 MR, owe over 13,000$ and car is only worth 13,200. Terrible situation to be in.

  14. Mike H says:

    Hello, I am in a 96 Saturn SC1. I am in a ‘credit improvement’ program through a dealership that I have since spotted on several rip-off warning websites. I am being charged $300 a month, at 25% interest. Now, I was told at the beginning when I sat down with the paperwork that I was to come back in a year and a half, get into a newer vehicle with a lower monthly payment. That was the thing that made me go ahead and make this decision.
    Let me say that I was in a rush, uninformed, ignorant to the whole car business, and was under pressure because I absolutley needed a vehicle – that day. This whole situation is my fault, and I understand that. I am simply seeking advice. Any advice from someone who has no reason to lie to me.
    My biggest mistake was that I did not even think to get the verbal part of this deal in a written form. They only ‘said’ that I could come back and get another vehicle it was not in any contract. Now, everytime I go back, they run my credit like 15 times, comes back and tells me “No, not right now.” They point out things on my credit report that need to come off, and say “Yeah, maybe if you could get about $5000 or something, we could do something…” No kidding. If I had that much money…blah blah blah.
    My credit has improved, this is a fact. I have recently gotten my reports and scores, however I have not been able to get all 3 of them. But my credit is better now then it was then, and yet they tell me there is nothing I can do. They check my credit enough times to bring my score down, they have claimed that I have been late on 2 payments which is impossible because their finance company takes it directly from my checking account, they gave me a thorough run-around when I first got the car regarding getting my brakes fixed (which was covered under their safety warranty).
    I got a pay-off amount of $6000 from the finance company. I have paid a little over $6000 already in over a year and a half. I have tried to go to dealerships, but no one will even talk with me when they see my credit score 544, 566. Then they find out about my negative equity and laugh.
    I have considered bankruptcy, but found out that it won’t do me any good, because I will lose my vehicle all together, and won’t be able to get another one without paying more than I am now a month. The reason this has become such an urgent issue for me is because it is not only a financial burden that I am having increasing difficulty carrying, but I am trying to move out of state. I could take the car on the road, now that I have gotten the brakes fixed, but that means I am pretty much committing to keeping this vehicle and paying the remaining $6000. I cannot stomach that, even though I know it is my own fault.
    Please, if you have any advice, any suggestions. I see that you have replied to the comments here, and you have no reason to lead me on or be dishonest with me. I am so tired of all the BS that I get with car people. I just need an honest, informed source of advice.
    Do I have no other choice than to continue to pay on this vehicle? Keep in mind I have virtually no savings now, and live paycheck to paycheck.
    What are your thoughts on what the dealership has done to me? Did they screw me completely, or is this whole situation completely on me?
    Please be honest, and please respond. Thank you so much.

    • mnc says:

      Mike, thanks for stopping by. Before sharing my thoughts, I need to remind you that I am not in a position to offer any financial advice and can only tell you what I would consider doing in a similar situation.

      Now, as you are learning, most of the credit improvement programs are not necessarily looking out for your best interests. In many cases, you can accomplish the exact same results without incurring any charges or fees by taking time to read and understand things on your own.

      With regard to your car, you owe $6000 on top of the $6000 that you have already paid? I just wanted to verify as that is how I understood what you mentioned.

      Have you taken the car to places like CarMax to get an estimate on the trade-in value? Have you reviewed local Auto Trader or classified ads? KBB.com? Is the car worth more or less than the remaining $6000 that you owe?

      With a poor credit score you may have a difficult time obtaining a car loan at a somewhat reasonable rate. For that reason, you might be better off trying to pay down the car at least to a point where you can sell it for more than it is worth. That would give you cash in hand to purchase a used car.

      Other than the brakes, which seem to be fixed, is the car in good condition? Why do you want to get rid of it? You mention that it is a financial strain but I am not sure that selling it and replacing it with another car puts you in any better situation.

      It sounds like this dealership has pulled one over on you and has not been completely honest or straightforward in everything they have told you. Part of that is on you for not being educated about your choices but part of it is on them as well.

      Hope that gives you a few things to think about. Feel free to follow up with any questions.

    • Liz says:

      I had to write because that is EXACTLY what happened to me. I went back after making a years worth of payments on time and they told me they couldnt do anything. THEY will say anything to get you stuck into these loan sharks. Now I am stuck with a car I don’t really like! That wasn’t Major World in NYC was it??? Liz

  15. Mike h says:

    Thank you for your response. I appreciate that you took the time out.
    Yes, you are correct, I still owe $6000, and I have already paid $6000, totalling $12000 that will be out of my pocket when all is said and done. And that’s IF they don’t stick any unexpected charges to me in the end.
    Other than the brakes, there are no major problems. I need to get my seat fixed, the headliner is a little ragged, and for some reason the trunk light won’t go off (had it disconnected). Other than that, the exterior is in fine condition, and no major mechanical issues. To be honest, the car has kinda grown on me, and I like it more and more. However, I just can’t stomach the money that I am paying for it.
    I had it appraised at a dealership that I was interested in doing business with, and they had it all of 5 minutes and told me it was worth $200. I understand that it is an older vehicle, lacks a lot of add-ons, and the interior is in need of attention, but $200??? So no, the car is no where near worth what I owe.
    Edmunds lists my vehicle as worth a $500 trade in, and $2000 dealer retail in the best condition.
    Why do I want to get rid of it? I was hoping that there was a better situation for me. The stress that came with the idea that there might be a solution for me out there somewhere, while I am struggling because I just didn’t know what that solution was, was the reason that I wanted out of the vehicle. But I have been asking people that either don’t know, or have a reason to lie to me. Hearing from you that paying for this mistake is the best way to go, is a bit of assurance. It lets me know that I can be at ease, because of my credit score, there probably is no better solution.
    My whole issue is that I am trying to get to Arizona. Pieces have fallen into place for me, (a place to stay until I get on my feet, an all but guaranteed job) but my car was a loose end that bothered me terribly. Now, seeing that biting the bullet is probably the way to go, I will just put the car on the road now that the brakes are fixed. Like I said, I just wanted to be sure that there was no other way.
    I took a long look at your website, and it is a blessing for people seeking honest advice and answers. You are doing a good work for people, and it will all come back around your way. You have been a major help, and if you have any further thoughts or advice, I look forward to them. Who knew that the answers I have been seeking for a year and a half would come through one simple google search???
    A last question, is selling my vehicle to a guy off the street the only way to go? There is nothing that a dealership can do? I have read your other articles about finding manufacturer’s with good rebates and such. Does this apply to me, or does my credit score eliminate me from these types of things?

    • mnc says:

      Thanks for the kind words of support and encouragement. Hearing that makes all of the time put into this site worth it many times over.

      Selling your car to a guy off the street is possible but you need to be aware that you cannot sell it while still owing money on a loan, as the new owner will not be able to transfer the title until the outstanding loan has been paid. So no matter who you would sell the car to, you will need to pay the remaining loan in one way or another. Without the upfront cash to do so, that is where working with a dealer becomes attractive because they will roll the remaining loan into your new loan.

      However, that results in you essentially paying for two cars because you are still paying off the old car while making payments on the new car. This might not be the best option considering the current car payments have had you stretched a bit.

      Your credit score may make it difficult to take advantage of the good rebates, but you would really need to talk to the financing departments of the car dealer or maybe a credit union. I have always preferred to secure outside financing when purchasing a car and then offering the dealer the opportunity to beat my financing terms.

      Looking at the bigger picture, you might want to focus on creating a solid budget where you try your hardest to eliminate luxuries that you cannot afford right now. If you can reduce your expenses, that will free up more money each month to go towards your car debt and will get you out from the remaining $6000 that much faster.

      BTW, you mentioned something about the loan and that it was $6000 if they don’t stick any unexpected charges on you. Is this a lease? If it is a car loan, I don’t see what they could charge you for at the end of the term.

  16. Mike H says:

    No I don’t believe it is a lease. I mentioned extra charges due to the shadyness of the dealership and finance company. Once again, my ignorance of terms and info rears its ugly head, as I am not able to say surely if it is not a lease.
    Even though its not what I wanted to hear, what you are saying puts me at ease like I said. I will take the steps listed on your website about talking with finance companies and credit unions and see if it is possible to get any rebate deals. They will have to check my credit at some point, though, so I gather that it isn’t a good idea to ask too many?
    I still have more to read on your website, because as you can see I am seeking to start over anew. I would like all these stupid debts I’ve put upon my self to stay behind when I move outta here. Your advice about credit is so important, even for someone who has not filed for bankruptcy. My mother is just about to get her bankruptcy started, and I have directed her to your site.
    Well I had no idea about the title not clearing until I pay off the complete loan. That pretty much seals it that I will be holding on to this vehicle for quite some time. Thank you again, even though this situation still sucks, I am so much more at peace about it all now, and I can concnetrate on sticking to my budget! Happy holidays, best wishes, keep up your awesome work, and any other good tiding I have left out!

    • mnc says:

      You’re right that you don’t want too many inquiries on your credit report, as a large number of hard inquiries can bring your credit score down temporarily.

      As mentioned in the article, you might want to call and just inquire about what they can do for you given a certain credit score. Explain to them that you don’t want your credit pulled at this time as you are evaluating your options before committing to a credit check. They may balk at giving you information without being able to check your credit but stick to it.

      I appreciate hearing your feedback and knowing that you have found some valuable information here on my site. If you have other questions and don’t find the answer here, send me an email and maybe it can be a new post as others likely have the same questions.

      Having a positive outlook and clear state of mind goes a long way to making a situation better so I think you are on the right track. Keep your head up and you will begin to see progress! Happy holidays to you as well!

  17. sb says:

    First let me say – great website. The responses (and quick response rate) on this article alone have been encouraging. Also, reading about the situations that other folks are finding themselves in is making me feel a little less hopeless.

    I purchased a 2005 honda civic VP (base model) in 2006 for 15,500 on a 67 month loan at an interest rate that’s around 14 or 15 percent. My monthly payments are $345. After 14 months of payments I still owe $13,300 on the car. My credit score was in the very low 500’s at the time, but in just a year and a few months of paying that loan on time, as well as my very large student loan payment, I’ve improved my credit score to the tune of 150 points (it’s around 655 now.. and climbing).

    Last week I decided to try trading my car in for a 2008 Prius (23,000 MSRP), but was told I have roughly $4,000 in negative equity that would have to be rolled into the loan. Even though they offered me a much better interest rate of 10.9 percent, I decided that the last thing I needed was to pay $4,000 more for a car that’s already $10,000 more than what I still owe on my Civic.

    My question to you is this: How can I pay my monthly payments in such a fashion that I can quickly pay down the negative equity and eventually trade in for the Prius? Alternately, I’ve considered refinancing through my credit union for a better rate… but with a credit score of 655 is that guaranteed?? Or rather should I trade in for a less valuable car and just take the lower payments? Just FYI, my Civic is in great condition and runs great – I only want the Prius because it’s less polluting and will save me some cash day-to-day on gas (and an insurance rebate through geico!).

    Sorry to ramble. I look forward to your response.

    • mnc says:

      SB, thanks for the kind words. I do my best to keep things interactive here so I appreciate that.

      The only way to quickly pay down the negative equity on your car loan is to make larger payments as soon as possible. Therefore, your best bet is likely going to be to try and find ways to increase your income and/or decrease your expenses. That can range from things such as selling old items on eBay to getting a part-time job in the evenings. Or maybe you can cut the cable/satellite tv and cellphones to free up a few hundred dollars per month. There are many options and the more that you combine, the quicker you can get rid of ALL the car loan debt.

      As far as refinancing, it might be possible but keep in mind that the rates on an auto refinance are typically higher than a new purchase loan. Look around at local credit unions and banks to see what the going rate is on a refinance. If the rate is low enough, it might be worth trying.

      However, with all of that said, if I were in your situation I would likely stick with the Civic. The Honda Civic is a very reliable car and I imagine it is probably getting somewhere around 40mpg – which might not be as good as a Prius but is much better than many other cars out there.

      Hope that helps.

  18. Michael says:

    Hi. I have a 2001 Chrysler PT Cruiser that I owe $8700 on and I’ve been getting estimates of trade in value in the $3000-$4000 range. However, the car has a bad transmission; and I’m very concerned about more problems occuring. I have a 715 credit score, and pay 7.25 % on a 60 month loan for a payment of $200 a month. I usually pay $250. I need a new car because when this one breaks I can’t afford $2000 – $4000 in repairs on top of this loan. And it WILL break. I realize that rolling over negative equity is bad, and it’s hard to find a decent used car for $5000 under NADA retail value (my credit union uses NADA). I could afford $300 a month for a car as long as it has a warranty and I know I wouldn’t have to pay for repairs. My credit union has an excellent warranty program that is very comprehensive, but my car isn’t eligible for the service. I’m going to go to college next August and I don’t want some huge payment but I need a new car! If the car breaks, I’ll have to take out a personal loan at 9% interest to cover it. I’ll end up spending a ton on a car I hate! I thought that if, for instance, I were looking at a car that was $11000 but retailed for $15000, I would add the warranty ($1500) making the price $12500. There’s a $2500 difference and if the dealer gave me a trade value of $4000, that would leave me $4700, making the cost $17200. Could I just take out a personal loan for the difference of $2200 so the car would be purchased at full retail value and I would be making two payments? Or is it smarter just to leave it all together? Also, my credit union can only fianance 15% more than the book value of the car – meaning I could fianace $17225. Should I just max it out and make larger payments so I’m not terrificly upside down? It’s a never ending cycle! I want to lease, but I’m unsure of what negative equity will do to a payment. Thanks!

  19. CJ says:

    Hi. My situation is this. My husband just had to have and wanted to purchase a 2006 Ford Mustang in the Summer of 2006. He was told his credit score was too low and he didn’t make enough money and he didn’t have enough down payment. So, they tell him, if they put me on as a co-signer, they can do the deal. I didn’t feel comfortable with it because my husband is or was, a contract employee. We’ve been married 20 years and he basically pleaded and begged. Well I signed the loan and we put $2,000 and purchased the car for $20,600 with a crazy interest rate of 20+%. I tried to talk him out of it but he just has to have this car he claims. The thing is when we filled out the loan app I signed the bottom as co-signer spouse, the loan company has been calling me and telling me I’m primary and at first said they didn’t even see my husband’s name on the loan and blah blah blah. Too cut the story down, my husband has never mad one single payment on this car or even pay the registration or insurance, I’ve paid everything. At the time, my vehicle was financed through Chase and I earn a good salary. I have since purchase another vehicle and financed through Ford Motor Credit @ 3.9%, and have perfect credit, no lates or anything, but due to this loan for the Mustang it has messed up my credit. My husband is still not working and I think I may just have been severely blinded by love, because I’m beginning to realize he’s never going to pay this loan. I can pay that loan as well as mine with my income but I’m paying all the bills in the entire house and I’m ready to kick him out. Sorry for the rambling, the main thing I’m trying to do here is find out how to take my name off the loan. I told the company he’s not working and he is the one who drives the car, and I offered to turn the car in voluntarily and they said oh no, we don’t want that. How odd, I thought, then after all these months they said they should pick it up and I should filed a straw purchase claim – is that correct and what is a straw purchase? Any help at all on this is most appreciated.

  20. PJ says:

    I have a 2006 Dodge Ram 1500 truck that I have had for about 3-4 months. I am trying to get in a car with a lower monthly payment that will save me more money down the line, and have a credit score of 650. The problem is I have too much negative equity in the truck. My payoff is about 27,000 with an interest rate of 16% and the truck is worth about 15,000. Is there any way possible I can make this situation better or should I just suck it up and keep making the normal payments on the truck? I love the truck and would love to keep it but I will be getting married in a little over a year and need to save money anywhere I can.

  21. Shane says:

    So I thought it’d be cool to buy a 50k truck that the dealer put about 13k in extras on (ie lift kit, wheels, etc). I put minimal cash down. I’ve had it for a year now and the current pay off is at 50k right now. My payment is huge and I’d like to get into a more economic and practical vehicle. It was fun to have a big truck but I’m over it now and stuck with a lot of negative equity. KBB and Edmunds say trade in is about 33k and NADA says about 36k. I have about 7k I can put down with a credit score of over 720 right now. I could possibly have a couple thousand dollars I can negotiate with right since it does have all the cool after market stuff on it? ROUGHLY that leaves me with 9-12K negative to deal with. I was thinking about maybe trying to roll that onto a smaller car costing maybe about 20K and paying about 30k in total. Would a bank finance more than a auto is worth? What should I do? I know I can refinance but then I have a huge freakin TANK I never like to drive anymore. Thanks for any advice!

  22. Jamie says:

    Lost and desperately needing advice. My husband was stationed in Hawaii and while there traded in our Chyrsler Mini Van for a V50 Volvo and in doing so added a good 10K on to the already astronomical price of the Volvo. Here we are a year later with a house to pay for (which is being rented) an apartment to pay for, another car ( Honda 03 low miles thanks to living in Hawaii, we are in Ga now). Our problem is this: the two cars are draining us literally. We are struggling to pay our bills and not succeeding. My husbands credit has suffered greatly (very low 500’s) and we just don’t know what to do about this car. He has tried to trading it on something cheaper, even trading both cars in for something cheaper…no luck! Is there ANY possible way out of this hole?? I think the pay off on the Volvo is like $34K and it has almost 20,000 miles on it. We’ve even tried selling the Honda outright just so we’ll only have one payment but the pay off on it is like 14,000 and no one is willing to pay that much for an 03 even though it only has 20,000 miles on it.

    ANY Advice would be greatly appreciated! Thanks

  23. Erika says:

    I own one car, a 1998 Honda Prelude with 127,000 miles. I also have another car, a 2005 Acura RSX with 34,000 miles. I owe approximately $15,000 on the Acura. I need a larger car as I’m expecting a baby in October. The Acura dealership is willing to buy back my car, and with the money left over from the extended warranty, I could be free and clear with no negative equity on the car (i.e. pay off my loan).

    I’m looking to buy a 2005 Honda CR-V. The ticket price is $18,900. The salesperson said that he could sell me the car with both trade-ins and lower my monthly payment from $400 to $300 a month.

    Would it be better to sell both cars a start fresh? Or would the trade-in deal be better? Several people have told me to sell the Prelude on my own, but I’m very limited with time right now –and, more importantly, quite honestly, I don’t really trust myself to sell it (I’m afraid that I’m going to make some wrong move and get a bad check or get scammed).

    I also thought about selling the Acura and keeping the Prelude, but I need reliable transportation because I drive about 2 hours round-trip per day for work. The Prelude is in great condition, but it will eventually need a lot of work on the transmission.

    My credit score is good (714), but my debt to income ratio is high (a little less than 50%).

    Additional info: The car loan company that currently holds the Acura loan will also finance the Honda.

    Last question: My husband’s credit is non-existent because he has never paid rent, had a credit card, or had steady income. He cannot get approved for a credit card. He has a job though and makes more money than I do. Should I include him on the loan to help him/us establish credit? Or should I continue to have only my name on it?

  24. Monica says:

    I purchased a 2006 nissan altima in May of ’06. My loan was for 24,000. I did not put a down payment on the car, which I know now was a big mistake. I pay 495.05 a month with a 13% interest rate. I am struggling extremely bad to make these payments I currently am 60 days past due. The reason I am behind in payments is due to fact that I have recently became a single mother. And I have also been paying for collision repair on the car. I called my finance company yesterday to request a payoff and the amount was 21,000. I also checked the trade in value which is only at 10,000. My credit has also taken a big plunge due to me being past due on the loan constantly. When I purchased the car my credit score was at 600, now it is at only 399 what happened?? Any suggestion would be helpful!

  25. mnc says:

    Monica, I would start by suggesting that you order a free copy of your credit report from at least one of the credit reporting agencies. Take a look at all of the accounts to ensure that everything is valid and reported accurately.

    The reason that you want to do this is because it seems like a rather drastic drop if your only negative items are the 60-day past due on the auto loan. Are there any other negative marks on your credit report? You mentioned that you recently became a single mother so you want to make sure that all accounts with your ex have been closed and/or paid off.

    Where did you check the trade in value on your car? In this area, 2006 Altimas are often going for $16k to $20k depending on condition and mileage.

  26. L S says:

    PLEASE HELP, I’M IN A CAR CONTRACT WITH DRIVETIME AUTO THE CAR IS A CHEVY IMPALA 2004, IT’S WORTH $5,000. THE DEALERSHIP IS ASKING FOR $15,000 FOR THE VEHICLE AND $8,000 IN INTEREST FOR A TOTAL OF $23,000. I’VE HAD THE CAR FOR 1 YEAR I’VE PAID $5,000 ON THE LOAN. THE CAR HAS OVER 100,000 MILES ON IT, PLEASE HELP. I HAVE NOT STOP THINKING ABOUT THE MISTAKE I MADE BY SIGNING THIS LEASE. I’M SURE THE DEALERSHIP THREW A BIG PARTY RIGHT AFTER I LEFT.

    • Jerry says:

      Sounds just like me. I was in a bind and had to have a vehicle. So I went to DriveTime. Got a 2006 Chevy Malibu Maxx. I owe 13000 and its worth 5000. At 23% its killing me. Its been about over 3 years, what happened with yours? I am dying to know.
      Thanks

  27. Michelle says:

    Hi

    I bought a 2007 Ford F-150 last year for my job which I no longer have as I was layed off. I own $27,000 on it and want to get out of it. If I sell it privately I might be able to get $22,000 for it, I basically I can’t afford the payments every month on it and am borrowing money on an overdraft just to make payments.

    my wife has a Kia Spectra which is payed for.

    should I try and sell it and just deal with the remainder balance on loan or try and trade it in somehow. my credit score is around 750

  28. Jeff G. says:

    Hello,

    Ok, I own a 2007 Hyundai Entourage Limited that had a $32,000 sticker plus with TT&L, extended plan, 10.49% financing for 72 months and no down…I’m paying $600. a month for 6 years. I recently went to trade for something sportier and better on gas and was told with the banks not releasing credit easily (my credit score is 690) and my negative equity…they recommended I wait another 2.5 years. I’m 2 1/2 years into a 6 year note. Here’s the kicker: remember I stated the Entourage was $32,000 on sticker 2 1/2 years ago, well ….the POS is only worth $12,000 just 2 1/2 years later in a trade-in value. My payoff is a little over $25,000. and that translates to $13,000 of negative equity. I will never ever ever ever own another Kia or Hyundai based on their depreciation of $20,000 in 2 1/2 years.

    Any suggestions????? Thanks!

  29. autum says:

    hello,
    i was just wondering if anyone could help me with my situation. i bought a dodge grand caravan a couple years ago, anyway i owe 14,000 on it and its book value is only 7,000.. i have tried to trade but seem to get no where with it . does anyone have any advice? my credit score is great . i just dont understand..

  30. NjT says:

    Hello,
    I have a 2006 Mustang GT that I purchased a little over 2 years ago. I have only 19,000 miles on it. As of now I owe $28,154 on it. I was told that the value now on my vehicle is only worth $14,500. My monthly payments are $602.00. How in the heck can I get out of this freakin bind? Ford really did me dirty, and put me in an upside down situation. Do you have any advice or suggestions what I should do? Or should I suck it up and keep paying all that money until I get some equity on it and then trade it in with some money down also? But I know by then my car will be worth nothing and I will be losing out in it all. I just want out of this high payment for the next four years…

    Thanks!

  31. Chris says:

    I just bought a car in march for 18,000…I have 13.5 int on it and Figure it to be work around 13000 now. I now have a company car and no longer need my vehicle. I want to sell it but I know I can’t get it for the payoff amount. I also won’t have the money to make up the difference. What options do I have.

  32. Gerry says:

    Hello, I have a auto loan which the payoff if 16k @ 20%.
    The vehicle is worth around 10k-12k in the NADA book
    (2006 Pontiac Grand Prix, 40k excellent condition).
    I’d like to get something in the 5k-8k range and put my negative equity into a new loan with a much lower APR. I have a 685 credit score. What is my best course of action would you say? Thanks.

  33. Kay says:

    I have a question regarding loan to value financing on automobiles. I have a 2007 Nissan Murano S that I purchased in April 2007. It was a used vehicle with 7000 miles on it. There were several fraudulent aspects of my transaction and the dealer has been shut down with the owners spending time in prison. At the time I had bad credit and felt I had no other options.

    The payment on this vehicle is $903.74 for 72 months. The interest rate is 20.72%. I originally financed $37081.18. The current payoff is $31436.51. I have been current and on time until recently when my work slowed down to the point I am earning 2/3 less than I was. Before December 2008 I was only late on one payment. Because of my work deteriorating I decided I could no longer afford this astronomical payment so I began shopping for another car. I quickly learned that the current LTV on this car is 230%. The value of this car now is around 13k with 45k miles on it and in good condition. There was no trade in involved in the purchase. I have figured approximately when I originally purchased the car the LTV must have been close to 160%.

    Along with so many other fraudulent activities that took place during the transaction I now have to wonder if such a high LTV was even legal. I can see being a little upside down in a car loan especially if there is a trade in involved but am learning as I shop for another vehicle this is unheard of. One dealer after another has told me that I have been taken in a major way. As you can see without having about $15000-19000 cash there is no way I can trade this car in, sell it outright, or refinance it.

    In December I did a deferred payment with the bank. I have since been told I have no options left for help with this payment. I have tried at least 10 times to talk with them about this matter and it is always the same answer. Can you please tell me if there are any banking laws or regulations that state how high the LTV can be on a loan? If so, can you please also tell me if I have any recourse at this stage?

    Thanks you so much for your help.

  34. mario says:

    i have a 2005 ford focus, i bought it in april of 2006 my interest rate is 10% for seven years i bought it for 17,000 and as of today i still owe 11,000. the value of the car is about 4,000. is there any way i can lower my rate or trade it in without a negative.

  35. LYN says:

    i have a 2006 pontiac grand prix w/ 17,000 or more left on it. like most people i just needed a car at the time. well now i am having to pay for repairs on it that leave me choosing between paying the monthly car note 450-500 or paying for repairs. my credit is not the greatest low 500. would it be wise to trade in for something cheaper or should i keep my vehicle and just deal with it. the repairs are things like a new rac and pinion (i think i spelled that right). i’ll need brakes soon as well. or would it be more beneficial to me to refinance. please help

  36. Lisa says:

    I am paying for a 2002 Kia spectra with 73,000 miles. It is a good car, but the payment of 303 a month is killing me. I moved back to my home town, and took a $5 an hour cut in pay. With this slow economy, I need to get this payment off my shoulders. I could make a rent payment with this money. I also have a low credit score in the low 500’s. Please advise.

  37. Matt says:

    I am upside down in a deal i made a little over a year ago. I own a 2007 Dodge Ram pick up SXT that books for $20,000 i owe 37,000 and some change. I have looked at other car deals with rebates and the most i have seen is $10,000 still leaving me with $7,000 upside down. I am unsure of how to get out of this mess, my payment is over $800 a month and its killing me any help would be great. Thanks

  38. Steve says:

    Buy from private sellers if you can get pre aproved. I will never buy from a car dealer again. 2yr old cars/trucks are as good as new ones ya just don’t have that new car smell!

  39. CARLOS says:

    I have a car that I am maybe $15,000 negative equity. Yes, I rolled over the negative equity from my other car to ge this one. I really need to get out of this car payment. I pay $750 a month and my interest rate is at 11.99%. I just bought my first home this year and my commute is much longer now so I’m looking to trade in for a hybrid. I can’t refinance it, I tried. My credit score is in the mid 600’s. Frustrated here. What can I do?

  40. Casey says:

    I have a 2008 dodge charger that my husband got for me brand new. He financed right at $25000 for the car. I was not on the loan because they said I didn’t have quite enough credit for it to do anything.
    5 years ago my husband had his own company and it fell through. When it did he ended up with a lot of debt and bad credit.
    When he financed the car for me he financed it at a 25% interested rate. That makes our payments right at $600 a month for 7 years. As the economy has gotten worse we have always made this payment and has NEVER been 30 days late. The past 6 months or so we’ve made the payment 2 weeks or so late but NEVER 30 days late! I really need to get rid of this $600 a month car payment and it would help out soo much.
    Since we bought the car we have gotten another truck also for my husband to drive back and forth to work. It was still relatively high in interest…but I was able to get on the loan. I am wondering if our bank would refinance to lower the interest rate and the monthly payment for us??? Possibly putting me on the loan would help get that done??? We are so upside down on this car it’s not funny, but at this point I just need a lower monthly payment!

    what should I do?

  41. Jennifer Anderson says:

    Hello everyone,
    My name is Mrs Jennifer Anderson and i am talking as the happiest person in the whole wild world today and i told my self that any lender that rescue my family from our poor situation, i will tell the name to the whole wild world and i am so happy to say that my family is back for good because i was in need a loan of $100,000 USD to start my life all over as i am a single mum with 4 kids and the whole world seemed like it was hanging on me until i met the GOD sent loan lender that changed my life and that of my family, a GOD fearing lender, Fredrick Thomson Loans he was the saviour GOD sent to rescue my family and at first i thought it was not going to be possible until i received my loan of $100,000 USD and i will advise any one who is in genuine need of a loan to contact Mr Fredrick Thomson via fredricktomsonloaninvestment@gmail.com because he is the most understanding and kind hearted lender.

  42. mike says:

    Hi im in situation where i had a 2009 mitsubishi lancer and i traded it in for 2010 ford f150. i was planning on moving to montana so i needed a truck and i didnt want to down grade to an older truck so i went for it all and rolled roughly $3000 in negative equity from the lancer on to the f150. Im not moving now due to the job i have and i can barely afford the payments. I still owe 32,000 on it and i got it appraised for 21,000 and i wanted to know if there is any way i can sell a vehicle with that much negative equity and start from scratch and get a cheaper car? i have tried to refinance but they said they i need $3800 down because they can only finance the “MSRP” of the vehicle, BUT this truck payment is killing me. Can i sell this truck or is there any way out of this?

  43. joe says:

    I am 21, i have a 2004 ford focus that I owe nearly 8000 on. my interest rate is 15.9 i believe. my loan is through a bank that is nearly impossible to contact, and when you do contact them they can’t help me. the value of the car has dropped below 4000. i want to just outright get rid of this car. is there any way i can do this without having to eat the expense of the negative equity?

  44. Lynn says:

    I have a 04 Explorer that I owe $7k on and the KBB trade in is $4125. My interest is 22%. My payment is $331 a month. I don’t have a good payment history on it due to letting a family member take over payments and then the ended up almost 4 payments passed due without anyone letting me know. I regained possession of the vehicle and have paid every 2 weeks to now have it caught up. My credit score is a 464. Should I try to refinance or see if I can trade it in (I’d much rather have a car better on gas) or do I have any options? HELP….THanks

  45. I have the same situation as Lynn’s. I wonder what happened since it was almost a year ago. Please let me know if you tried to refinance it or trade in was a much better deal? Thanks.

  46. Michael says:

    I have a 2010 Lexus IS 250 that I need to get out of… I owe 44,000 on it but it’s worth 30,000 … so I am 14,000 negative and my pym is $810.00 a month… I have awesome credit and just want to cut that pym in half… what do I do?

  47. ant says:

    i traded in a car to carmax and had negative equaty on it, the car for trade in back to carmax was 22k, i owe 24k. my wife has a low payment on her car, if i rolled over the negative into a new loan or give the car back, and try to get a clunker, jst had newborn and need to pay debts. trying to have a low payment under 300.00, wonder if i Idont know if carmax would give me the maximum if I were to volutary give back car. Any thoughts?
    Ant

  48. Burt says:

    Once you are not upside down on a vehicle that will have 70,000 miles on it do you keep it for the life of the loan or do you trade it in on a new vehicle?

  49. Charles says:

    I have a credit score of 590, my wife 620 and I have a credit card in my name maxed out at $890.00 on a $700.00 card. Filed bankruptcy 3 years ago. I financed a $5,000 car last year then paid it in full in exactly six months, traded on another car and took another $6,000 loan for a 03 prius that now has 145,000, it is a pure lemon. I got a trade in offer of $2,600 and owe $5,500 after paying $300 a month for 8 months. I want out. I already have a dealer working on getting me into another vehicle where my difference will carry over into a new loan, before this car blows up. My wife and i work over 40 miles from home, and she works evenings, the car has left her stranded at work multiple times, and no mechanic can find the problem (even the toyota dealer, I cannot pay for the car AND get repairs, the new car *if this works* will hav 60,000 or less miles and a warranty. I took on a roomate and have added $300 to my monthly income which will be applied to outstanding debts. Am I likely making a mistake, my wife need something reliable as we also have two childeren one 6yrs and one 6mos. This car is dangerous in my belief. Thank you for any advice in this matter

  50. michael says:

    I have a 2005 3.2 Acura TL/w Nav. The car on KBB is about 12K; I am in a negative equity situation. I think I owe about 16K right now; monthly payments are sky high as i am sure you imagine. A month ago I put new insurance on it, bought four new tire, and got my regular oil change. The transmission went on the car a couple of weeks ago. It is too expensive to fix it (estimate 5500)not including power steering rack!! Is there any way out of this to start fresh? I feel like this is a no win situation; how do I get rid of this car?

    Thanks!

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