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I am wanting to sell my car to use that money to pay down debt. Here's the rub. When I got into this car I carried over some negative equity from my previous car. That combined with it being a brand new car has put me about 12k upside down. I am desperate to get out of this loan so I can pay down some of the credit card bills I racked up from living on credit cards in college. I have read that a log of people will sell their car and get a loan for the difference of what they sold it for and what they owe. I would love to do that but my credit isn't great. I had good credit but then lost my job over the summer. A few months later of catching up and unpaid credit cards killed my score. I just need some advice on how to stop the cycle and start climbing out of debt. Any help is greatly appreciated.
I am wanting to sell my car to use that money to pay down debt. Here's the rub. When I got into this car I carried over some negative equity from my previous car. That combined with it being a brand new car has put me about 12k upside down. I am desperate to get out of this loan so I can pay down some of the credit card bills I racked up from living on credit cards in college. I have read that a log of people will sell their car and get a loan for the difference of what they sold it for and what they owe. I would love to do that but my credit isn't great. I had good credit but then lost my job over the summer. A few months later of catching up and unpaid credit cards killed my score. I just need some advice on how to stop the cycle and start climbing out of debt. Any help is greatly appreciated.
OUCH! 12k upside down?
If this is based on trade-in value or resale to dealer, keep in mind that private party resale may not put you quite so far upside down!
Is your loan through a credit union or a bank?
If it's a credit union, you might want to try explaining your situation to them and see what options they might be able to offer.
Are you able to make all your minimum payments currently? If so, you might want to try waiting 6-10 months to improve your credit and then try to get a personal loan for the negative equity.
12k at high interest would be quite expensive so it might not be wise to do it now with bad credit. This especially if you currently have a low rate on the car loan (below 6%)
Alternatively, you might try talking to your lender and explain to them that they should work with you because 12k of your loan is in effect already unsecured debt, so they wouldn't be increasing their risk if they let you take a personal loan for 12k to sell the car. Of course this might not work and they might not budge, but you may as well try it.
Also, would you buy a beater or just use other ways of getting around town until you are no longer broke?
Do you need a car? If not then sell it to get rid of that debt, of course if it isn't worth what you owe you will be paying the difference. In the business it is known as being upside down. Carrying negative equity into your new loan is an easy way not to have to come up with and pay off the balance but it puts people in the situation you are in now. I say if the car is a good one and isn't breaking down and costing you more money then keep it and look to some other way to reduce your debt.
If you sell your car to a dealer that is if they want it you don't have to buy another one, they will pay you wholesale for it. If you sell it on your own you will get more money which you can use to pay down your loan.
At a dealer you could trade down and the difference could be used to pay down your loan and you might have a smaller car payment.
With not so good credit your interest rate will be higher on any loan so you need to weigh your options carefully.
Good luck
I am wanting to sell my car to use that money to pay down debt. Here's the rub.
When I got into this car I carried over some negative equity from my previous car.
Any help is greatly appreciated.
What you needed to do then, and now, is to
a) increase income b) reduce spending c) sell stuff.
Nothing else will fix this.
Find a better or additional job and trim expenses.
Hold a yard sale. Ebay.
If this is based on trade-in value or resale to dealer, keep in mind that private party resale may not put you quite so far upside down!
Is your loan through a credit union or a bank?
If it's a credit union, you might want to try explaining your situation to them and see what options they might be able to offer.
Are you able to make all your minimum payments currently? If so, you might want to try waiting 6-10 months to improve your credit and then try to get a personal loan for the negative equity.
12k at high interest would be quite expensive so it might not be wise to do it now with bad credit. This especially if you currently have a low rate on the car loan (below 6%)
Alternatively, you might try talking to your lender and explain to them that they should work with you because 12k of your loan is in effect already unsecured debt, so they wouldn't be increasing their risk if they let you take a personal loan for 12k to sell the car. Of course this might not work and they might not budge, but you may as well try it.
Also, would you buy a beater or just use other ways of getting around town until you are no longer broke?
This is based on the private selling value. I know, 12k. My loan is through Hyundai, which is probably why they were able to finance the car at such a high value. I haven't tried calling them and asking if they would let me sell it and still owe them the difference. That would be preferable. The loan is at like 3%, so it's a good interest rate. I was planning to buy something for really cheap (around 2k) and drive it until I have saved up more to buy a better car. All of this stemmed from my realization that I have put myself in an impossible situation. I am just wanting to dig out and getting rid of my car would free up a lot of money to put towards other things. Otherwise, I feel like I am just chasing my tail.
What "other things" are you referring to? You need to be living in austerity mode until you clean this mess up - otherwise you'll never clean it up. No eating out, travel, etc.
How much can you put towards your debt each month above the minimum payments?
If this is based on trade-in value or resale to dealer, keep in mind that private party resale may not put you quite so far upside down!
Is your loan through a credit union or a bank?
If it's a credit union, you might want to try explaining your situation to them and see what options they might be able to offer.
Are you able to make all your minimum payments currently? If so, you might want to try waiting 6-10 months to improve your credit and then try to get a personal loan for the negative equity.
12k at high interest would be quite expensive so it might not be wise to do it now with bad credit. This especially if you currently have a low rate on the car loan (below 6%)
Alternatively, you might try talking to your lender and explain to them that they should work with you because 12k of your loan is in effect already unsecured debt, so they wouldn't be increasing their risk if they let you take a personal loan for 12k to sell the car. Of course this might not work and they might not budge, but you may as well try it.
Also, would you buy a beater or just use other ways of getting around town until you are no longer broke?
Quote:
Originally Posted by ncole1
What "other things" are you referring to? You need to be living in austerity mode until you clean this mess up - otherwise you'll never clean it up. No eating out, travel, etc.
How much can you put towards your debt each month above the minimum payments?
Other things = other debts (credit cards, student loans) I live pretty modestly. I have cut back my spending tremendously. I am reading books, primarily Dave Ramsey, on how to pay off debt, build savings, etc. He just recommends that the first steps is to sell your car, and if upside down get a loan for the difference. I am assuming this advice is geared towards individuals with good credit, though. I have reached out to a non profit debt consolidation program so they have lowered interest and fees on my credit cards. I put 360 towards that every month. 650 towards my car. Right now I am not able to pay more than minimums because I am spread too thin. Which is why I feel like I need to get rid of my car.
This is based on the private selling value. I know, 12k. My loan is through Hyundai, which is probably why they were able to finance the car at such a high value. I haven't tried calling them and asking if they would let me sell it and still owe them the difference. That would be preferable. The loan is at like 3%, so it's a good interest rate. I was planning to buy something for really cheap (around 2k) and drive it until I have saved up more to buy a better car. All of this stemmed from my realization that I have put myself in an impossible situation. I am just wanting to dig out and getting rid of my car would free up a lot of money to put towards other things. Otherwise, I feel like I am just chasing my tail.
And the answer to that is going to be no. I mean, you can ask, but the answer is no. They'll release title to the purchaser when you pay off your loan. As long as the buyer is okay with not having the title for however many years it takes you to pay off the loan, it could work.
Other things = other debts (credit cards, student loans) I live pretty modestly. I have cut back my spending tremendously. I am reading books, primarily Dave Ramsey, on how to pay off debt, build savings, etc. He just recommends that the first steps is to sell your car, and if upside down get a loan for the difference. I am assuming this advice is geared towards individuals with good credit, though. I have reached out to a non profit debt consolidation program so they have lowered interest and fees on my credit cards. I put 360 towards that every month. 650 towards my car. Right now I am not able to pay more than minimums because I am spread too thin. Which is why I feel like I need to get rid of my car.
If you gotta sell your belongings to take care
of debt then something ain't right. Find other
avenues to pay off your debt like a better job
for instance.
If I were you I'd keep the car, negotiate better
financing deal on said car and atleast think about
bankruptcy for any other debt that's not a student loan
if i just could not see myself paying my unsecured
debt long term.
Last edited by Europeanflava; 12-02-2014 at 11:05 AM..
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