General Question

qualitycontrol's avatar

How can I get out of my car loan?

Asked by qualitycontrol (2570points) December 13th, 2008

I purchased a car 4 months ago and financed a loan for 25,000$. I can’t really afford the gas or monthly payments. I’ve only made 4 payments on it so far and since I rolled taxes into the loan I’m upside down on a trade in. I’ve already tried and they’re only willing to give me 17,000$ for it leaving me with 8,000$ of debt. No bank was willing to give me another loan on top of that. Are there any other ways I can get out of this loan without destroying my credit?

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34 Answers

poofandmook's avatar

No.

Believe me, I’ve tried. I purchased a car with my then-boyfriend, and when he dumped me, he stuck me with the car since everything was in my name. I’m stuck paying for it.

Unless you can find a way to pay off the loan, or you get in with a dealer while they’re having a pay-off deal, you’re stuck.

AlfredaPrufrock's avatar

You may not be able to get out of the loan, but if it’s a 5 year car loan, you may be able to get it refinanced to a 7 year. Personally, I would take the $17,000, buy a $2,000 used car, pay $15,000 on the car loan, refinance the $10,000 as a personal loan for 5 years, and chalk it up to “lessons learned” about how to manage money. 1) Never buy a depreciable asset on credit. 2) Never buy a new car, unless you tend to keep a vehicle for 12 years or more. People who are impressed by the fact that you have a new car are really not worth impressing, IMHO

Mizuki's avatar

you can 1. file bankruptcy or 2. let them repo the car and enter the 8k into a debt settlement program where you will pay back 50 cents on the dollar…

How many dollars is it worth to “save” your credit? The amortized pay back on $8000 could be as high as $24k depending on the term….what is 75 fico points worth to you.

by the way, you will never get the car refinanced in today’s frozen credit market

poofandmook's avatar

since my credit is already in the toilet, I choose to work my ass off to pay for the car. My payments and insurance alone total just about $700 a month.

Mizuki's avatar

poof—that equals $8400 per year? Dont you think there must be a better way?

poofandmook's avatar

@Miz: There is no other way. I can’t sell it or trade it in and like I previously stated, my credit is in the toilet, so a loan or refinance is out of the question.

LKidKyle1985's avatar

yeah that’s too bad, how did you end up in this situation to begin with? didn’t you figure how much you could afford a month on this?

AlfredaPrufrock's avatar

When I was in my 20’s and 30’s, banks were never as predatory as they are now. Our whole economy is based on people earning $12 an hour living as if they earn $40 an hour.

miasmom's avatar

I think in today’s economy your credit is worth more than anything, so don’t file bankruptcy unless you absolutely have to. Talk to the company your loan is with, they might be able to work with you on lowering payments and if not, sell it(like Alfreda said) and refinance what is left of your loan into something more doable.

AlfredaPrufrock's avatar

You might want to look at the rest of your expenditures, like eating out at lunch or going out with friends after work. It’s amazing how often people look upon these expenses as necessary. Look at where all of your money is going, and cut back drastically. Do you have any specific talents that could be put to work, picking up extra money on a temporary basis? You can trade free time for work, and apply all that money to the debt, that would help.

bythebay's avatar

Do not let the loan go bad.
Do not them repo your car.
Do talk to your bank about refinancing the loan for a longer term.
Do protect your credit, you’re going to need it.
Do tighten your belt and accept your situation.
Do your homeowrk next time and don’t overextend yourself.
Good Luck!

Mizuki's avatar

I just disagree with throwing away thousands of dollars to perserve a credit score.

I understand that we are conditioned in this way by advertisers, brainwashed to act and spend in a way against our self interest. Credit is only important when you make a major purchase in the real world. Since we make payments in dollars and not in fico points, it makes sense to preserve dollars.

Repo the car, and file BK, and save 8400 per year, or be a good consumer and give the creditor every penny you have, and be a good little debt slave—this is the crux of my point.

Preserve dollars, you will need them. Your fico score will be less and less important since the lending craze is over. folks with 780 credit score cannot get loan approval with out financial reserves…

Try and buy food with a fico score and tell me how valuable credit is….

AlfredaPrufrock's avatar

Mizuki, the thing is that filing bankruptcy may not get your out of debt. It doesn’t get you out of credit card debt anymore—you have to pay it off.

Mizuki's avatar

@—alfreda——you are wrong, I work for a lawyer that specializes in consumer debt….with all love and lurve and due and undue respect….

AlfredaPrufrock's avatar

Hmmm. My husband was general counsel of a regional bank for 10 years, and has taught banking regulatory law to bankers all over the country for the last 16 years. He’s in 10–15 different cities every month, and has trained federal bank examiners…we are up to our eyeballs in bankers and lawyers here…most of his business comes from community banks. He always asks attendees about lending practices…

People will not be able to finance living beyond their means, if that’s what you’re looking for. Regulation will be back for banks, and with that, enforced common sense consumers.

Mizuki's avatar

So how could you be so wrong about one’s ability to file BK 7 and discharge their debt?
once again with love and lurve and due and undue respect

AlfredaPrufrock's avatar

Because a bankruptcy judge made that comment at a cocktail party last week…

AlfredaPrufrock's avatar

You only want to file bankruptcy as a last resort, not because you feel you made a financial mistake and are having a tough time making the payments. Lots of employers are beginning to run credit reports on prospective employee, and if, in the event you should lose your job, the last thing you want is to have to justify a bankruptcy because of a financial mistake. “Hard time making the payments” is different than not being able to make any payments, and that’s not what qualitycontrol said. “Hard time making the payments” means change priorities: take your lunch to work, don’t eat out, cancel the cable, don’t by alcohol/cigarettes/other vices, don’t take a vacation, carpool so you drive less, scale down Christmas, sell the big screen TV, whatever AND apply that money directly to the debt.

I personally would take the $17,000, buy a $2000 car, and pay off the $8,000 as a 4 year installment loan. That’s $166.67 a month in principal. The payments should around $225 a month, tops. What you do is this: Make the bank payment, bank the difference between the loan payment and what you are currently paying or feel your can afford, say $250 a month. In 10 months, you take the $2500 you’ve saved, and the $2000 car, and you trade up to a $4000 used car. Keep saving. In 10 months, you take the next $2500 you’ve saved, and the $4000 car, and trade up to a $6000 used car. Keep doing this. By the time you’ve paid off the bank loan, you should almost have relatively newish car that you’ve paid cash for, and own outright.

bythebay's avatar

Mizuki:
You couldn’t be any more wrong about almost everything you stated. And by the way, your fico score will be even more important once this crisis starts to subside. “once again with love and lurve and due and undue respect” Don’t give advice when what you’re preaching is a pile of BS. Alfreda’s responses were well thought out and accurate. I have a feeling the lawyer you work for is in a strip mall with a neon sign if that’s the best advice you have to offer.

Mizuki's avatar

bythebay—evidence? links? or just hot air?

It is scary that Alfreda and bythebay are misinforming and misleading and are totally wrong, and neither of you can prove a shred of evidence to back up your erroneous assertions about bankruptcy, credit, or sound financial advise.

You have instead chosen to assail my character and attack me personally, when you’ve proved that this topic is outside of your area of expertise, and you cannot and will not cite anything other than being married to General Council. Hell, I can see Russia from my house, but I’m not a foreign policy expert. My husband speaks Italian, I’ve been copulating with him for 15 years, and I still don’t speak Italian.

I’m finished with this thread, but before I go, I suggest a colonic irrigations for the 2 of you.

miasmom's avatar

Unfortunately we live in a society where it is ok to be irresponsible. You want that thing, but can’t afford it, it’s ok, just use credit and if you can’t pay it back, then file bankruptcy. Don’t consider giving up some pleasures, like 4bucks coffee every morning so you can be responsible and pay off your own debt.

bythebay's avatar

@Alfreda: I guess your husbands expertise and my 15 years of financial expertise mean nothing…pity. As for the colonic irrigations; perhaps we can go together and get a 2 for 1 price. That would be the financially repsponsible thing to do.

qualitycontrol's avatar

this thread is awesome lol. Thanks for all of your advice. The thing is…I can’t take the 17,000 that the dealer offered me because I was trying to trade it in for a different car and they said the bank wouldn’t accept the 8,000$ gap in trade. I don’t think they will buy the car outright for 17,000. I can’t sell it privately because if I get what it’s worth (16,000–19,000) I still owe the bank money and the buyer will need the title, right? I didn’t buy the car new…it’s 2 years old but when I bought it I put no money down and rolled all the taxes and dealer fees into the loan. I won’t let it get repo’d because that is not good for anything. The term is already 75 months…I don’t think they let you go any longer lol. I’ve been desperately trying to get someone to take over the payments but no one with a brain will do it since I owe more than what the car is worth. Also, when I bought the car I was making 800–1000$ a week but now I’m only making 400–500$ a week. Nothing I really had control over. When I bought it I knew I could afford it but things changed quickly. I appreciate the help, keep advice coming. I’m so young and stupid lol.

miasmom's avatar

it never hurts to ask a bank if they would be willing to give you a personal loan for $8000, have you tried?

qualitycontrol's avatar

no, I don’t think I stand a chance the way the economy is. I have good credit but short credit history which is usually why banks don’t give me loans. And even if I did get it I would owe all that money on a car I don’t even have and I would prob still be paying the same amount per month. I would have to trade the car in and since they’re only going to give me 17,000 it’s basically like I’m losing 8,000$. Am I right or what did you mean?

miasmom's avatar

well, you said you rolled other things into your car loan, did you pay 17000 for the car or more? Because if you paid more, then you would lose money, but otherwise you would be getting a new loan for the other stuff you rolled in.

qualitycontrol's avatar

no I paid more. 17 was what the dealer was offering to give me as a trade in. Anything I do at this point will cause me to lose money. I might as well try to pay it and not lose it. I wish I could go back to my old car though lol.

miasmom's avatar

a hard lesson learned! Good luck!

JohnRobert's avatar

Whatever you do… just don’t leave the windows down and the keys in it accidentally ;)

Response moderated
zelli_celia_e's avatar

Many of these are great comments, I am having similar problems myself, and while taking some of your great advice, I am also learning that everyone’s situation if different and will be handled different, I can understand why some of your aren’t seeing eye to eye because your disputed comment is catering to my situation. As someone else may read this and feel it represents their personal situation exactly.

Response moderated (Spam)

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