TrevorK
A friend has made some bad choices, long story short, they owe 26-27K on a car worth 17-18K.

Is there a way to sell the car, and let the bank allow them to pay back the 8-9K difference? Or would the bank bitch about that because they have no collateral now the car is gone? (They don't have a decent job - maybe 21-25K/year)

Any other way to get rid of the car so that they don't owe as much? I think a personal loan at a bank is out of the question - since they don't have

rage2

Man that sucks. Usually a bank doesn't allow a car loan to get in such rough shape, especially from folks who don't have great credit. Curious how that happened?

Anyways, the car won't sell, because there's a lien on it. Nobody would buy it without full payment to the bank. Because if some guy buys the car for 18k, and doesn't check for outstanding liens on the car, the car will get repo'd by the bank if a payment's missed.

Weapon_R
From past experience, you may be able to negotiate a buyout with the bank. Tell your friend to explain to them that if they repo the car, they will not get as much as X amount your friend is willing to pay. They know exactly how much they made and how much more they need to avoid a loss, so generally they will work around with you.

TrevorK

Problem is - friend has NO money. They make enough to pay car insurance and car payments and gas. That's it. Nothing else.

Do you think this will work though? Do major banks negiotiate?

TrevorK
Bank was probably a sucker for a good looking girl.

I don't know how it happened either - didn't know her when she got the loan. She wasn't making anything either when she got the loan, and has a really bad credit history. I guess the banks just wanted to make a quick buck....

I never thought of the lien - that's true. She wouldn't be able to sell it.

rage2

Well then, I can help her make some money! haha j/k :).

I mean what kinda car is it, and why she owes $27k on a $17k car? $0 down on a 10 year loan on a new car or something?

TrevorK

She owes 27K because she had a 01 tib. (I think) and then she traded it in to get a 03, and of course she lost a ton on the trade, and got ripped off by the dealer (Paying sticker price and such) on her 03.

So right now she owes like 26-27K on it still.

B17a

The only way I can see her getting the loan in the first place was if someone co-signed for her, ie mom or dad.

rage2
Well in that case, the bank was stupid to finance that deal. Basically, it's the bank's loss, because she wont be able to sell the car with a 27k lien on it. The only way out is to get a loan for the difference, pay that off, and sell the car at that time (assuming she can sell the car for what she thinks its worth).

Bank's not going to negotiate on it IMO, I mean, they'll get the same deal by repo'ing the car, screwing up her credit, PLUS her oweing them the difference.

Maybe it's time to buy some kneepads... she's getting screwed either way :(.

B17a
If its co-signed by her folks then they'll be the go to people for the difference. Otherwise...as you've so eloquantly put it.....

legendboy
voluntary repossession. Thats why you don't finance any domestic or crapy car. People always end up being like 10g's upside down on there loan. I saw it everyday when I worked at honda/mazda with my customers who were trying to trade out of there financed cars.

TrevorK

What's "voluntary repossession"?

Does that mean the bank sells it, and you still owe the difference to them (But they don't have an asset to hold it against)?

Problem #1 with that is the 1/4 panel needs to be replaced before that happens as she got into an accident with it. I imagine that'll be 1-2K.

TrevorK
What about bankruptcy? (She has other debt as well)

What are the details? Does she get away debt free, and in turn has her credit fucked for 7 - 10 years? Is it that easy?

<I know it's not the right way out, just considering the options>

legendboy
You cannot ever get out of a conditional finance agreement with any lending company. They won't release the lean on the car until they have all there money. They will not negotiate, let you sell the car and make payments, take the car back-auction it off and make you pay the difference. The only way is to come up with the difference, keep the vehicle or repo it. A voluntary repo is the same as a normal repo, it just shows good will on your part. (which doesn't really mean shit) She is gonna have a R9 credit rating either way. (if the car goes back)

Sometimes dealers will try to refinance a new car with some money owing put into the new loan but on that amount no bank is gonna loan anybody the money over what the car amount is. I think its something like 15% of MSRP overalowance.

B17a

Personal bankruptcy should be avoided at all costs, its not like she's Mike Tyson and blew through $300M. For her, the best thing to do is own up to the debt and pay the piper. If it means taking a part time job, so be it, that's the price she'll have to pay. I am assuming that these other debts you refer to are of reasonable size (a few g's). Personal bankruptcy means no credit for a long time, everything will be on a cash basis, not very pleasant. Even if she is renting, a lot of property owners run credit checks on prospective tenants.

Ben
I'm a Finance Adjuster for Diamler Chrysler Financial, this is right up my alley.

Very true! Lease is your way on those kinds of cars, the car depreciates faster than the payments knock down the principle. I repo'd a guy who had a 2001 Sebring today, Owed 21600 on the car but was only worth 13200 blackbook. The guy is Bankrupt so we end up writing off a substantial loss and Up goes insurance rates.

DO NOT DO A VOLUNTARY REPO if at all possible! Voluntary is easier for the Lender, but still blows your credit with a brutal R9 hit which will haunt you for 7 years. Even if they have been late 30 or more days on a car payment it will be beat as it is...do whatever possible to salvage the credit rating.

Again, same as above. Is a personal line of credit an option, using the equity in a home to pay for it?

Refinance is an option if they are over half of the payments. they take the remaining months and double it, so the payments are almost half, but takes twice as long...this is kind of like a last resort.

Exactly.

There is no room for negotiation, bank doesn't give a shit, they just want their money, and if they repo the car, and get less than the principle, they can technically take you to court for the remainder. Not a fun situation.

best of luck.

E36M3
It sounds like she needs to hang onto the car and get another job or a better job.

The bank most likely will not negotiate very much, but they may be willing to switch to interest payments only for a few years, assuming that she hasn't missed any payments.

That way, she could keep the car, the bank wouldn't go through the expense of the repo and subsequent write off, and she could hang on until she had a better income stream.

Doesn't sound pleasant.

boi-alien
if she "sells" the car can the buyer take over the loan payments? i'm not too sure about this cause i guess the car isn't worth much now.

Ben

Technically yes, but she will still be legally on the contract...so if the buyer defaults, shes still accountable. Finance contracts allow for the adding of names, but not the subtracting of them.

Redlyne_mr2
See if theres anyone as dumb as she is and try and transfer the contract to them..as its been said already her best bet is to sell the car, and get a personal loan for the remaining balance

max_boost
How about this one.....

Take a loan from Bank of M&D
Tell them you fcuked up and you need their help really bad. Unless she's been a bastard child all her life, there is no reason why her folks would not help her out when she so desperately needs it.

Ben

Unless of course they flat out dont have the 27 odd thousand....

04blackMAX
burn the car, and tell the insurance comp u had all your gold buillion in the trunk, about 500k worth

max_boost

Great idea!
Remember the Simpsons when Moe wanted Homer to write off his car :D

Redlyne_mr2

Still screwed, insurance will only cover the blackbook value of the car..theres no way in hell blackbook on that thing is 27K, plus they determine the payout from the day of the accident which means she's responsible for any payments or interest that accrue after the fact

rage2
True, but her credit won't be fucked :).

Too bad that would be illegal hehe.

Z_Fan
I've got a friend who was in this situation years back.

If what they are really looking at is being upside down by 10K, they shouldn't panic and do something stupid! $10,000.00 is NOT a lot of money, it just seems like it when you're upside down.

My theory on these things is ALWAYS hold on to the Asset. Even if it is depreciating. You're gonna be PAYING for it, even if you Sell it because you're behind. So, keep it!!! Suck it up, pay the price. Don't do stupid things. This is a good lesson to learn when you are young...speaking from experience, I did this!!!! Yes, me!!! I did it. Owed $12,000.00 more than my '90 Twin Turbo was worth. So you can imagine my debt situation. I kept the car, sucked it up. Refinanced my loan with the bank to be MORE AGGRESSIVE and pay it off faster. Took me 3 years of my life. When I was done I had an old beat to shit car that was worthless. (Relatively). But I did it and learned. Not many years later, I own 4 cars. All of which are paid for in full, except 1 which is leased because I wasn't sure I was going to keep it!

Unless you have a clean get-out plan, you're in for a good lesson in what not to do when buying a car. Financial institutions make it far too easy to borrow money. People who think they can afford new cars, really can't. From my own experience, people who lease cars are two types people. 1) People who can't afford to buy a car. 2) People who don't care about giving the money away for 'renting' it. (These people CAN afford to buy a car!)

Two more options to try, other than just 'dealing with it'. Try to borrow money at low or no interest from family members (like Grandparents). Some grandparents have actually planned their lives very well, and have a little $$$ just sitting around. Some even plan to not touch that $$$ while they are alive, because they want it to go to kids, grand-kids when they die. HOWEVER, there are a lot of people who will give the 'inheritance' to a child who asks for it - and some who just give it before dying - because they want to see the results of what the money can do or will do...though this is likely NOT an option, it is worth checking out. Even if you can get the 10K to make the loan back to a par value situation, that'd make you feel better about the situation.

The following is not suggested, but does work, and I KNOW friends with this scenario. It's not peachy, they can't get a new mortage, they can't MOVE because of it, etc. So it's NOT all wonderful after bankruptcy removes your debt. However...

Another option. Spend some time applying for credit cards at all major financial institutions. Get store cards, like the "Bay", etc. Over the course of the next year, use the income from the job to pay for the car, and the credit cards to 'have fun!'. After about 1 year, ensure your debt is right out of control. (IE - NO HOPE of paying for it, and DONT). Once your debt is over $30K, and hopefully around $40K, file for bankruptcy.

Two things of advice here!

1) Make sure if your friend is young, that she can live with NOT having her own (mortgaged) home for the next several years. Ideally, she'd have a mortgage already.

2) Make sure the CAR isn't sold at any point.

Now, when you file for Bankruptcy, it's NOT TRUE that your credit is destroyed for 7 years. In fact, while you won't be able to borrow money from a bank for a while, your debt is removed. It is LAW that says you are allowed to own a vehicle (fineprint: it may be that your Tib will be worth too much, but you'll still have transportation of some kind), and it is LAW that says your home can NOT BE TAKEN from you because of a Bankruptcy. You do have to continue making payments on your home, or they can and will take it, but they can't "JUST TAKE IT BECAUSE OF BANKRUPTCY!"

You will have no credit - anywhere - and it takes two years before you are even allowed to have a credit history rebuild. You will have to log all your expenses, go to debt council folks, etc...if you do declare bankruptcy, BUT - just DONT DO IT FOR $10K. God no!!!!

Good luck to your friend, and I've got a vanity plate for her tibruon.

"BROKE"