UPSIDE DOWN AND DROWNING
Everybody's Uncle,
I have a similar question in regards to voluntary repo but my story has a twist. A few years back I went out, purchased a used car and knew NOTHING about buying a car. All I knew when I left was that I had a cute VW Beetle. Needless to say they saw me coming and stuck it to me and I let them.
My interest rate was insane. After about 2 years my car started breaking down on me and I could no longer afford to keep up with the maintenance. I had just put out $3000.00 dollars into it that I borrowed and a week later my a/c had gone out and was going to cost roughly around $2,500.00. In addition, I had two flat tires which were also bald. I could not put another dime into that car. So, I went to trade it in for a new car only to hear the term upside down for the first time. I was $7,000.00 upside down. I didn't have any money to pay towards that $7,000, I didn't have anything for a down payment on a new car but all I knew was that I needed a car ASAP, my employer required that I do a bit of driving on a daily basis. I shopped around a bit and no one wanted to roll that amount over into a new car, finally Saturn did. They rolled over the $7,000 plus I again am upside down due to the new car. Now, my pay off for a 2004 Saturn Ion3 is $23,000. Which blue book is $10,000. My payments are $512.00 a month and I am having some financial problems. I hate my car. I don't feel comfortable nor safe in it. I want out of it. I have shopped around for a new car just out of curiosity to see what someone could do for me. Dealerships are more than happy to help me if I pay $600-700 a month and will have paid out roughly $42-50,000 on the new car which was only selling for $19-30,000. I can't get myself out of this hole I've dug for myself. Dealerships have recommended driving the car off a cliff (which I'm too chicken to consider), or voluntary repo. They told me that I will have to pay the difference after the car has been sold by the lender but even then I'd still be paying less money a month. $200 for a new car and $200 for repo. I'd still be saving $ but my credit is affected.
Any suggestions? Extra money from somewhere is not an option. How does this affect my credit? Will I be able to get a new car? Will I be able to purchase or rent a home? How long does it stay on my record? Is it really frowned upon like it was years ago?
HELP!!!!!!!!!!!!!!!!!!!!
Thank you so much for any advice and for taking the time to read this,
Sincerely,
Desperately hoping for a car fire!!!
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Dear Desperately,
I love your sense of humor and candor. Let's see if I can answer with humor, facts, and an opinion or two.
Stop wishing for a car fire or for Houdini to send Saturn to Satan. Even if the car dies and goes to heaven, you remain in financial hell. YOU STILL OWE THE AMOUNT BORROWED.
Having endured the galloping shaft of the last two dealers, why would you put faith in the $200 per month repo payoff figure? Might be true - if you pay from now until you drive Saturn around your heavenly abode. Might not - I will bet they neither guaranteed the $200 nor the time period. I maintain - YOU STILL OWE THE AMOUNT BORROWED.
If the car is worth nothing, it will sell for nothing PLUS dealer costs for repossession, PLUS LEGAL fees for attorneys, to get a judgement against you. Check the small print in the paragraph entitled - Suppository Clause/ Rights of the Shaftologist. It's up there somewhere. A junkyard can sell off parts and might be your best/only offer. YOU STILL OWE THE BORROWED AMOUNT.
The dealer can call "owing more than the collateral is worth," upside down, negative equity or BS on a bun. YOU STILL OWE THE BORROWED AMOUNT.
Suggestions:
Learn the First Rule of Holes - when you're in one stop digging.
Try torturing yourself to sleep rationalizing a pour of $3000 into a car that will still be worth nothing after the pour. Ditto with a $2,500 A/C. Upside Dumb, even with new tires. (Ambien can help.)
Bankruptcy (a.k.a. Suppossitorialectomy) is fun too. After some legal fees, higher because the rules changed, you could be declared Upside Down free. Rumor has it that it plays havoc with credit for seven years (as does repo) but it might be possible.
What - you don't want to pay $50,000 for a $20,000 car? What - there is dealer that will do it? What - is the difference between upside down for one car, two, or three?
What - you want to buy a new car and a home? With...what? Not with my money; not with my blessing.
Here is the good part. We don't send upside downers to prison. Having demonstrated zero financial skills, and to avoid a Master's Degree in Hole Digging, find a good debt counseling service (don't ask a car dealer). They can reduce interest rates, perhaps negotiate some debt elimination and posture you as upside down attempting a hand flip. Maybe that $200 per month can work for you in a managed, supervised payment plan.
You are not the only one drowning in debt. Take an honorable route out of your problem. I am amazed at how quickly good credit can be restored if it is rebuilt month to month.
Upside down bakes a great pineapple cake. Upside down finance cooks your goose.
Everybody's Uncle
