I am stuck in a ridiculous car note and paying mostly interest this past year Help

Recommending immoral behavior will not help him in the long run. Defaulting on a loan means someone else is stuck paying. Follow through on all agreements and you always win in the long run. The guy needs to cut all expenses and get a second job. He will end up owning a nice car and be a better person.

The lender took a risk lending the money in the first place.

They have an allowance for doubtful accounts to handle non payments.

He needs a first job before he can get a second job.

He could sell to a dealer but wouldn’t get much.

He could make a private sale but needs to pay the loan off first or have the buyer lend him money to pay it off as part of the deal.

Either way he’s likely upside down and needs to come up with thousands more that he doesn’t have.

Job loss is a tough thing.

I’m more concerned about his rent or mortgage.

X-Runner wrote:

There are a couple options here and this is similar to another thread.

One way to get out of making these payments is to simply stop making the payments (again).

Sure, they will repo the car but not for a couple months, at least.

Another is to let someone steal the car or maybe

drive it off a cliff (don’t stay in the car).

Focus on getting a job.

Maybe remote work so you won’t need a car.

Letting the car go to bank will ruin his credit he will be paying more on everything including car insurance. Unless he’s willing to bike to work, doesn’t plan any major purchases for 5 years that require financing or his credit is already in the toilet, this is a last ditch option. I’m guessing if it was worth $40K 3 years ago and he owes $26K, he’s not too far from break even.

I think you’re joking, but Insurance fraud is a bad idea and a most likely a felony in his state for something like arranging for a car to be stolen.

quality control wrote:

If this tale is real...

1. Sell it. Try carmax or diy it. If it's a desirable car you might get out of it. Used car values are high now.

2. Refi it. Your payment could drop by half. Can someone cosign to offset your credit?

3. Let them repo it. Worse things happen, you'll get over it.

And to the inevitable poster who claims to pay only cash for cars, here is my {eye roll}.

With low or no interest loans the norm, and stocks flying, why would anyone take 30k that will be 50k in 4y of investing and buy something in cash that will be worth 12k in 4y?

Take the stupid Dave R./Suzy O act elsewhere.

Honestly, unless 1 is possible which I assume it isn't I think your best bet is #3. Chalk this up to a lesson to living beyond your means and try to live more responsibly and rebuild your credit.

This also shows that auto loans as some currently sit would not be possible without help from the federal government. There is nowhere near collateral value in cars as they depreciate to cover the loan.

I hate immorality. He agreed to pay it back. The lender absorbs it by charging a higher rate to every borrower. So I end up paying for the deadbeat who doesn't follow through. Would you feel the same way if you were his friend and you loaned him the money? He promised to pay you back but oh well. You can absorb it by not buying as much stuff for yourself and your wife and children

The used car market is very strong right now and dealers are having a hard time finding inventory. If you negotiate your but off, you may be able to dump the expensive vehicle and get into a more affordable contract. I would guess that your $40k vehicle is worth about $20k today. You will have to finance $6k in negative equity in order to get into a cheaper vehicle. If you buy a used Honda Civic for $14k, your loan will be for about $20k. If you finance that out over 60 months, your payments will be much lower (don't do 72 months) depending on your interest rate. If your credit has been damaged, this might not be a viable option as the new interest rate may be much higher than your current rate. But if you have managed to protect your credit score with COVID forbearance agreements, this might work. Of course the biggest problem is getting financed without a job. You probably need to gut it out until you get a new job. You will not get a good interest rate if you are unemployed. You will probably end up at tote the note lots and face at least 12%.

Hey kids, don't buy a car you can't afford to pay for in cash.

You're not "stuck" in a ridiculous car note. You willingly signed up for the loan, just like the student loan crybabies who want bailouts.

Financial guru wrote:

I hate immorality. He agreed to pay it back. The lender absorbs it by charging a higher rate to every borrower. So I end up paying for the deadbeat who doesn't follow through. Would you feel the same way if you were his friend and you loaned him the money? He promised to pay you back but oh well. You can absorb it by not buying as much stuff for yourself and your wife and children

While I don’t think he should do it, It’s not due to the morality, or lack thereof.

Banks pay .01 - 2 % typically and charge 2.5 - 8%. It’s a number game to them. He agreed to pay it back, but the bank knows it’s a risk that he may not and that’s why they charge a higher rate. There is a clause in the contract that stipulates the process should he default that both parties sign. They get back the collateral, the car in this case, and take a loss in the current year but probably made money overall.

When there is no collateral, as in a credit card, banks commonly charge up to 20%.

I’ve never defaulted and don’t plan to, but I might if the circumstances were dire.

Let's see the car, blur the plates. It better be good, like a used f-type. If it's a loaded honda accord, you get a virtual slap.

Maybe you can rent it out on one of those apps. Or Uber premium driver.

an American taxpayer wrote:

You're not "stuck" in a ridiculous car note. You willingly signed up for the loan, just like the student loan crybabies who want bailouts.

This ^^ x 1000

can you return it?

I am skeptical of Dave Ramsey's never take a car loan approach. But he is spot on in terms of not buying more car than you can afford. I can now afford virtually any car made on the market. But it doesn't make sense to spend so much on a car - I try to keep it at 25k or lower. I recently purchased a 2017 Lincoln MKC with the large engine with 20k miles on it for 24k. These deals are everywhere. Sure Lincoln may not be your thing, but it is a luxury car at a price less than a new Honda Accord.

For those that truly need a pick-up truck for work or substantial property or farm maintenance - the same goes - buy used unless you truly can afford it.

Exactly, dump it for a used car. So it's mabey worth, 12k as a trade now,that's 12k off the loan, and roll the rest on a 12k car; so 12 or 10k down, and 12k on a used car worth 12k, total . The total new loan would be 24k, but l could get away from this car and start over.

quality control wrote:

If this tale is real...

1. Sell it. Try carmax or diy it. If it's a desirable car you might get out of it. Used car values are high now.

2. Refi it. Your payment could drop by half. Can someone cosign to offset your credit?

3. Let them repo it. Worse things happen, you'll get over it.

And to the inevitable poster who claims to pay only cash for cars, here is my {eye roll}.

With low or no interest loans the norm, and stocks flying, why would anyone take 30k that will be 50k in 4y of investing and buy something in cash that will be worth 12k in 4y?

Take the stupid Dave R./Suzy O act elsewhere.

#3 is a crappy option. If you let them repo it, they will auction it off for wholesale. You are responsible for the difference. Try to sell it yourself is best. Then find a cheap jalopy to drive.

The OP doesn’t have a job.

He can’t trade it in and roll negative equity into a loan for another car.

Not without a co-signer.

He can’t afford to keep the payments because he was a casualty of the economy.

Things happen.

This isn’t that terrible.

Dan Kahneman wrote:

,.................. wrote:

I second what has been said.

- you made a mistake and recognize it, good.

-sell the car privately for as much as you can

- attempt a low interest loan from a local credit union for the balance

In the future, NEVER buy a car you can't pay for fully in cash. If that means you drive a "beater" then that is all you can afford.

I haven't taken out a loan for a car in 35 years (excepting when they offered 0 interest). However, when I first started out I did take out loans for cars. I needed good reliable transportation and didn't have the savings.

Absolutely. It's OK to take out a car loan if you need reliable transportation for work, and public transport is bad in your area. But in this case, you can always find a lightly used, reliable small car for less than $10,000 and get a loan from a bank. Payments will be more manageable than for a 40k car, and the car will lose less value if you lose your job and need to sell.

What kind of car? You may be able to sell it for close to remaining loan amount. I wouldn't just assume that it is only worth $20k. If it's a Tesla, you could get $26k or more. Of it's a truck then will preserve value. If it's a Bolt you're screwed.

The problem with repo is they will sell it for way, way less than you could get. And you will still owe the balance. Repo is not exclusive remedy.

Look at online dealers like Vroom, Carvana, etc. They will pay premium for some models. Check out Carmax. List it yourself at $30k and see what offers you get.

X-Runner wrote:

The OP doesn’t have a job.

He can’t trade it in and roll negative equity into a loan for another car.

Not without a co-signer.

He can’t afford to keep the payments because he was a casualty of the economy.

Things happen.

This isn’t that terrible.

I haven't tried to roll it over into another car yet, but l really need to get out of this car. Roll it over into a used car????