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My MIL financed a used 2005 Chevy Cobalt 2 years ago. Unfortunately, she is having financial difficulties right now due to a job loss and cannot afford to make payments on her car anymore and the bank won't work with her. I looked up her Kelley Blue Book value and her car is worth about $5,000 less than what she owes. Is this something she can use to her advantage? Anyone have any advice as to how she can get around this? Any special programs?
If she is $5K upside down on that car, there's probably not much she can do. I can't imagine a bank or anyone else refinancing her because of that. When I was in that situation many years ago the finance company (not a bank) allowed me to move a few of my payments to the end of the contract, at significant expense to me. But at least I kept my truck, and didn't completely wreck my credit.
Maybe she needs to go farther up the chain at her bank.
If she is $5K upside down on that car, there's probably not much she can do. I can't imagine a bank or anyone else refinancing her because of that. When I was in that situation many years ago the finance company (not a bank) allowed me to move a few of my payments to the end of the contract, at significant expense to me. But at least I kept my truck, and didn't completely wreck my credit.
Maybe she needs to go farther up the chain at her bank.
The worse part though from what I picked up was that there was no job. Without that I don't see much hope. If they can't get work before the repo man gets there then bankruptcy is the only delay tactic but of course that's much worse on the credit report.
If the car gets repo'd it's going to go to auction and be sold for even less than it's trade in value. The bank will bill for the difference. So this could end up being several thousand dollars more expensive than just the $5K.
Unless the gap can be closed ASAP and the car sold to stop the bleeding it doesn't look very good.
The worse part though from what I picked up was that there was no job. Without that I don't see much hope. If they can't get work before the repo man gets there then bankruptcy is the only delay tactic but of course that's much worse on the credit report.
If the car gets repo'd it's going to go to auction and be sold for even less than it's trade in value. The bank will bill for the difference. So this could end up being several thousand dollars more expensive than just the $5K.
Unless the gap can be closed ASAP and the car sold to stop the bleeding it doesn't look very good.
All good points. I remember not knowing any of that when I had my problems years ago. I also remember it being expensive to move those payments out, almost as much as the payments themselves, but it bought me enough time to get back on track, mostly. I ended up trashing my credit later anyway.
I assume she has insurance on it that will pay it off if the car is "wrecked"..Accidents happen you know.Cars also get stolen all the time and left destroyed.I hope she doesn't forget and leave her keys in it while parked in the "wrong" neighborhood.
I assume she has insurance on it that will pay it off if the car is "wrecked"..Accidents happen you know.Cars also get stolen all the time and left destroyed.I hope she doesn't forget and leave her keys in it while parked in the "wrong" neighborhood.
Yeah, insurance fraud will certainly solve all of her issues!!
I officially award the "Least Helpful Post of the Month" to this post.
My MIL financed a used 2005 Chevy Cobalt 2 years ago. Unfortunately, she is having financial difficulties right now due to a job loss and cannot afford to make payments on her car anymore and the bank won't work with her. I looked up her Kelley Blue Book value and her car is worth about $5,000 less than what she owes. Is this something she can use to her advantage? Anyone have any advice as to how she can get around this? Any special programs?
Have it cleaned up/detailed really well then list it for sale in News on Wheels and the Charlotte Observer (maybe you could pay those costs for her?).
Once she sells it have her go to her bank and meet with an officer to explain the situation and give them whatever amount she made on the sale. She should be prepared to show them the bill of sale so they'll know she didn't just pocket some of the money and then claim to not be able to pay off the whole loan. Hopefully they will work with her in some way or another.
I assume she has insurance on it that will pay it off if the car is "wrecked"..Accidents happen you know.Cars also get stolen all the time and left destroyed.I hope she doesn't forget and leave her keys in it while parked in the "wrong" neighborhood.
Insurance only covers the cost of the car, she will still owe the 5K she is underwater. (unless she has something called gap insurance, that will cover the gap between what the car is worth and what the loan is). Most likely though she doesn't have that.
Can she pick up a couple odd jobs like cleaning to make her car payment?
Folks, this is why you need to put enough of a down payment on a car, so god forbid you need to sell it, you can.
Have it cleaned up/detailed really well then list it for sale in News on Wheels and the Charlotte Observer (maybe you could pay those costs for her?).
Once she sells it have her go to her bank and meet with an officer to explain the situation and give them whatever amount she made on the sale. She should be prepared to show them the bill of sale so they'll know she didn't just pocket some of the money and then claim to not be able to pay off the whole loan. Hopefully they will work with her in some way or another.
She can't sell it because she doesn't own it. How can she transfer the title to the new owner if she doesn't have it? The bank won't release the title until the car is paid off. "Hopefully" doesn't work in this situation.
Quote:
Originally Posted by sheenie2000
Insurance only covers the cost of the car, she will still owe the 5K she is underwater. (unless she has something called gap insurance, that will cover the gap between what the car is worth and what the loan is). Most likely though she doesn't have that.
Can she pick up a couple odd jobs like cleaning to make her car payment?
Folks, this is why you need to put enough of a down payment on a car, so god forbid you need to sell it, you can.
I agree with your first paragraph, but I question your last sentence. It can be argued that dumping a substantial amount of cash into a depreciating asset only to (possibly) ensure a more break-even point if the vehicle is sold is not a sound financial move. That's what gap insurance is for, if available and appropriate. Is it available on used cars? I don't know.
If it were me, and it was 5 years ago when I bought my most recent car, I'd sit on that money for whatever may come ahead. It may cost me a little extra interest, but I prefer to be liquid if possible.
She can't sell it because she doesn't own it. How can she transfer the title to the new owner if she doesn't have it? The bank won't release the title until the car is paid off. "Hopefully" doesn't work in this situation.
LOL, what a brain fart that was I got caught up the fact it was not a new car but a used one and tripped all over myself OOPS
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