General Question

Ltryptophan's avatar

How do I legally get out from under an upside down car loan without wrecking my credit?

Asked by Ltryptophan (9100 points ) June 14th, 2010

Bought a car to get to law school. Wouldn’t even think of being a lawyer anymore. Don’t need this fancy of a car just to get to work. Stuck, now what.

Observing members: 0 Composing members: 0

28 Answers

YARNLADY's avatar

One way I have heard of is to get the dealer to take the car in trade in and add the current loan on the back of a new loan. Longer payments, but lower amounts and most likely lower interest.

john65pennington's avatar

No matter what, your credit is going to suffer. if you take the car back and give the dealer the keys, your action will be reported to the credit bureau. this is not a good idea. i would attempt to keep the car and make the payments, if at all possible. this action will cause great harm to your credit that will remain for years. somethings never go away.

Ltryptophan's avatar

By the way if you ever want to go to law school more than ten miles away, it is a very good idea to have a reliable means of transporation, my car broke down is not an excuse in law school. Nor is “my car is in the shop”

JLeslie's avatar

I once had a neighbor take over a lease I had, do you think that might work with a loan? The leasing company actually changed it over to their name. I also had a neighbor who bought my car by paying it off near the end of a lease. With that too I was able to get the car into their name with just one change of hands (some contracts require the dealer to bu it back first and then sell to the next person. Even if the dealer makes nothing, the buyer will be basically taxed twice).

I know you are upside down, but maybe someone will find your payment schedule attractive and still be willing to buy it?

I still don’t get why you would need a fancy car to go to law school?

Ltryptophan's avatar

@john65pennington you are right. I would never just turn the car over!

Ltryptophan's avatar

@JLeslie it is complicated, and the car ain’t that fancy.

JLeslie's avatar

@Ltryptophan Well, good luck. I don’t know how long you have had it, but at least with time you will be less and less upside down.

Ltryptophan's avatar

I am about $1500 upside down, but I can’t find a buyer for its value. So that means that if I want to sell it immediately I would be more like $3000 down. I would rather keep using it before I took that kind of loss on a relatively new car.

Ltryptophan's avatar

Then I will still need a car, and I don’t have that figured out either.

ETpro's avatar

The best way is to be a person of your word. You signed the promissory note. Unless it said something like. “I will pay this loan off unless it’s inconvenient or costs more than I think it’s worth.” then do what you promised to do. As @YARNLADY said, you could roll the debt onto a new loan, but as a new car plunges in value shortly after you drive it off the lot and it is used instead of new, then you will probably end up right back in the same mess but with an additional $15,000 of debt added on. Anything but paying the loan off is going to hurt your credit.

Ltryptophan's avatar

@ETpro I have no interest in defaulting. Nor do I have any necessity to default. I could pay every single note, and I have plenty saved to make notes in case of hardship. This isn’t about inability to pay the car note. It is about having a depreciating piece of property that I don’t want or need, and finding a way to get rid of it.

PandoraBoxx's avatar

A $1,500 lesson is a stiff one, but not so horrible in the long run. See if you can refinance the car to get the payments down. You might want to see if Dave Ramsey’s Financial Peace program is offered in your area, and take the class. I have seen some people to incredible financial turnarounds with that program.

Knowing grad students, $1500 is about 6 months of going out, or less. You might want to think about a part-time job specifically for the purpose of paying off the car.

Ltryptophan's avatar

@PandoraBoxx I got 4 jobs man…

SmashTheState's avatar

@ETpro An agreement entered into under duress is not really an agreement, either in the moral or legal sense. Even in law, it’s recognized that (a) a contract which benefits only one party is not valid or binding, and (b) if the harm caused by not signing the contract is so great that a reasonable person would find her- or himself compelled to sign, then the contract is not valid or binding.

Given that the majority of wealth is owned by tiny fraction of the population, that usury has been considered both immoral and criminal in most cultures across most of history, and that the alternative to going into debt is generally an increasingly grim and punitive poverty, I don’t think any reasonable person would (or should) feel any moral obligation to give more profit to the capitalist schweinhunds who rule the West.

“If you want to know what God thinks of money, just look at the people he gave it to.”Dorothy Parker

ETpro's avatar

@Ltryptophan I’m unaware of any way to get out from under the debt without damage to your credit.

@SmashTheState The question and background info doesn’t indicate any duress or that the car was sold under false pretenses. I think it would be awfully tough to convince an American just that the loan is unfair with rhetoric like “capitalist schweinhunds who rule the West.” If @Ltryptophan tried that and lost the case, that would really toast the credit report.

PandoraBoxx's avatar

Do you have things that you can sell? Yard sale? Even $300 is $300 less.

Ltryptophan's avatar

There’s this one intersection…lol just kidding.

@PandoraBoxx It would only take me a matter of a few months to cover the difference in selling it. I think I am going to bite the bullet and pay off the extra debt out of pocket since I can afford it. It just is lame to lose 1500–2500 over it. Experience sure is costly.

PandoraBoxx's avatar

Yes, experience is costly. What’s lame is buying an expensive car as a grad student. The tuition for that class is $1500. A car is a depreciable asset; you should only pay cash for a car. The type of person that is impressed by the car that you drive, isn’t really a person that’s worth impressing.

JLeslie's avatar

@SmashTheState We got rid of our usury laws in the ‘70’s if I have my info right, which I think is awful, but even though I would prefer a law in place that limits loan sharking, I don’t think the OP can argue he was under duress, or didn’t understand the payment he was getting into. I mean he was accepted into law school if I understand correctly, he must be able to understand that he will need to be able to afford the monthly payment. I don’t think any court of law is going to see it as ok that he default on the loan. Not that he is going to default, sounds like he just would prefer to not have such a high payment. I am talking more generally, then specifically about the person asking this question.

You wrote I don’t think any reasonable person would (or should) feel any moral obligation to give more profit to the capitalist schweinhunds who rule the West. What does that mean? That you think it is fine for people to just dump their property and leave corporations holding the bag with bad loans piling up?

Ltryptophan's avatar

i was only trying to get safely and reliably to class. anyway, it is moot. don’t do as i did for sure. yes, i got myself into it, noone elses fault and i am currently enjoying the car immensely, with no regret for having bought it. Now I don’t need it, and I am downgrading to afford other things like an eventual retirement.

BoBo1946's avatar

@JLeslie and @ETpro very good answers! :))))))))))

Response moderated (Spam)
stranger_in_a_strange_land's avatar

The only lawful and ethical way is to pay off the loan and not make that mistake again. Keep the car until it’s junk, while saving enough to pay cash to buy the next one..

john65pennington's avatar

Don’t forget that you cannot see a vehicle that has a lien on it. its a felony in all the states.

BoBo1946's avatar

umm..was it my answer that was spam…confused!

bolwerk's avatar

Credit can be improved again. It’s a bit of an effort, but it takes months, not years. You may want to just take the hit and talk to a credit counselor.

john65pennington's avatar

That should be sell a vehicle, not see. typo. john.

YARNLADY's avatar

@BoBo1946 No, the answer that came in just below yours was a spammer. The mod system has been changed to just leave a bar with a short explanation in it – no user name.

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther