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Yeah there is no easy solution to get out from under a vehicle that you owe more than it is worth. Keep it, maintain it and drive it until it is paid off or repairs get too expensive. If the seats are uncomfortable there are options out there to assist/improve that.
I would not suggest selling it and rolling the negative equity into another car loan.
The truth is there is no easy way out of this. I got myself into this back in 2013 and only just recently got out of it.
I bought a new car in 2011 after I got my first job out of college - the only new car I had until that point. Only put like $1,500 down. I had negative equity as soon as I drove off the lot. Mistake #1.
Car rode fine around here, but was just a backbreaking experience when I moved to Iowa, which had far worse roads. I wanted something bigger and smoother. Traded that in for an older, used SUV. I did decrease my loan balance and payments, but owed way more than car #2 was worth. Mistake #2.
That car ate probably $3,000 in repairs in the first year. Traded it in for a new Elantra - again, with minimal or no money down. I think I owed something like $27k-$29k on that $20k car. Of course, this was before it took the hit driving it off the lot - I was a good $10k underwater, at least. Payments on this Elantra were $489/month.
Negative equity will clean up over time. I was able to get it cleaned up earlier this year (with throwing $1,500 - $2,000 at it some months), sold the car, paid off the balance, and bought a used Escape in cash.
It's not a killer if you can afford the payment and don't end up with cashflow problems, or a job loss, etc. However, if you're paying another $100-$200 month over what you should be paying, that can be a problem if there is a cashflow issue. Also, the higher car note crowds out savings, or even paying the note itself down faster. People with negative auto equity typically don't have the lump sum to clean up the negative equity, refinance the car, or pay off the deficiency should something happen.
Smart Alec. Everyone knows you lose money on a car 98% of the time. Driving them through and beyond the bottom of the depreciation curve allows you to get the most for your money most of the time.
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Originally Posted by Army_Guy
Maybe he could do like that episode of the Simpson's where Homer stole Moe's car for insurance fraud and attempt to roll it off a hill?
Unless he has GAP and it gets totaled, he is going to pay that $7k and rightfully because he borrowed it willingly.
Might be possible to change the seats out. There are a lot of aftermarket options out there for that.
Recaro makes an orthopedic seat. I'm sure there are others. They aren't cheap, but they might work.
What do you mean "ergonomics"? The seat, or the overall arrangement?
If it's just the seat, he can try various inserts, cushions, pillows, and for well under $7000 install a quality seat.
If it's the internal arrangement and fit, I would rent a few cars I think I like. Make sure they fit.
Then I would make the best trade deal I could. 0% for five years is about 120 bucks/month. For six years, under 100.
Sucking it up one way or another is a better choice than permanent body issues due to whatever is going on.
Money can be replaced.
Your body, not so much.
No, that's the other problem. He's having trouble finding another one he likes as much as this one.
I feel bad because I believe in buying new, paying it down quickly, and keeping the car for at least 10 years to make it pay for itself. And I kind of talked him into doing this. UGH.
SO, no real answers other than "Suck it up, Buttercup" and eat the loss?
Kind of what I figured.
(I knew I could count on the evil remarks too. People are so brave behind their keyboards.)
To be honest, buying a brand new car isn't necessarily the smartest idea either. You are hedging your bets that you can keep the car for 10 years. Your ability to keep the car depends heavily on being able to afford the vehicle long enough to pay it off. But a job loss, some unforeseen financial difficulty, an accident, etc.. are all things that can happen and flip you upside down in a car loan quickly.
And as he is quickly finding out.... buying a brand new vehicle gives you little option to replace it in the event that something such as his situation with discomfort comes into play. In short, you're stuck. You either roll the negative equity into a new loan (and go deeper in the hole), sell it private party and pay the difference out of pocket, or keep it and live with the problem.
I don't think these are evil remarks, but honest ones. Some people can't handle anyone being honest and blunt about a situation. That doesn't mean it isn't the truth. This is one of those unfortunate situations.
I'm not being a Smart Alec. When people say stuff like that, they end up making sub-optimal decisions.
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Everyone knows you lose money on a car 98% of the time. Driving them through and beyond the bottom of the depreciation curve allows you to get the most for your money most of the time.
Exactly. Minimizing the expense is a legitimate goal associated with vehicle ownership. But that is far different from "the car pays for itself."
I did have a car that paid for itself. An extremely rare Subaru Legacy GT Spec B(Less than 500 made for the year). Drove it for a year and a half and sold it for more than I bought it for. Enough difference to cover gas/maintenance with some leftover too.
Whatever is done, i would want to protect my credit rating. If I signed the line promising to pay the loan, it's a point of ethics that my word is good. I expect that many or most new cars are worth less than what's owed as soon as they're driven off the lot.
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