Upside Down Vehicle Payments


W ~

A car is not one of the best investments in the world. Try your best to pay it off with the terms you currently have (catch up with the negative equity). If it is one of those IB (interest bearing loans), make it a priority to pay it on time. If you're behind in the payment and don't feel like you can catch up, request a free extension and ask them to waive the fees. If you have outstanding late fees that you're concerned about but don't need and extension, ask them to "settle" the fees. You may want to propose 50% on the dollar.

The other thing you may want to look at is if you're not satisfied with the current interest rate,do comparative shopping for a better rate. Keep in mind you need consider certain variables such as how much interest you have left to pay in your current deal and decipher if it is economically feasible to accept the new deal (you don't want to enter into a new deal and be duped by a lower interest rate when you may have paid most of the interest on your old deal)........Good Luck
 

JROCK said:
W ~

A car is not one of the best investments in the world. Try your best to pay it off with the terms you currently have (catch up with the negative equity). If it is one of those IB (interest bearing loans), make it a priority to pay it on time. If you're behind in the payment and don't feel like you can catch up, request a free extension and ask them to waive the fees. If you have outstanding late fees that you're concerned about but don't need and extension, ask them to "settle" the fees. You may want to propose 50% on the dollar.

The other thing you may want to look at is if you're not satisfied with the current interest rate,do comparative shopping for a better rate. Keep in mind you need consider certain variables such as how much interest you have left to pay in your current deal and decipher if it is economically feasible to accept the new deal (you don't want to enter into a new deal and be duped by a lower interest rate when you may have paid most of the interest on your old deal)........Good Luck
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Thanks ROCK...I'll check into the interest remaining, on the note. I was actually considering a refi, but I don't know if it's feasible, according to your post. I'll check w/them and see.

Thanks again...:tup:
 
Technically, if you finance a car without a substantial down payment, you are "upside down" as soon as you drive off the lot, because you could not resell the car for the same price that you bought it for.

The best way you can get out of this is to listen to the prior advice, which is to pay the car off. If you are trying to rid yourself of this car, only to get another car, then you may as well trade it in, and let them add the difference to your new note. Basically what you are doing then is paying more for your new car than it is valued. Now as a sound financial move, it isn't one, but if you just have to have a new car....then go for it.

The safest way to pay off a car loan quickly is by making extra payments. making two bonus paymenst a year, can pay off a 5 year loan, in only 4 years, if you have a sub 10 interest rate. And if you think you don't have the cash to do it, you are fooling yourself. Add two montly payments. divide it by 12, and that is the amount extra that you will have to pay monthly to pay that loan off faster and pay less interest.
 
Suge said:
Technically, if you finance a car without a substantial down payment, you are "upside down" as soon as you drive off the lot, because you could not resale the car for the same price that you bought it for.

The best way you can get out of this is to listen to the prior advice, which is to pay the car off. If you are trying to rid yourself of this car, only to get another car, then you may as well trade it in, and let them add the difference to your new note. Basically what you are doing then is paying more for your new car than it is valued. Now as a sound financial move, it isn't one, but if you just have to have a new car....then go for it.

The safest way to pay off a car loan quickly is by making extra payments. making two bonus paymenst a year, can pay off a 5 year loan, in only 4 years, if you have a sub 10 interest rate. And if you think you don't have the cash to do it, you are fooling yourself. Add two montly payments. divide it by 12, and that is the amount extra that you will have to pay monthly to pay that loan off faster and pay less interest.
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Thanks for the info...:tup:
 
The primary reason people are upside down is that cars depreciate so rapidly. Cars lose most of their value in the first 2-3 years. It may be a good idea to buy a good used car rather than a new car. For example, buy a 2-3 year old Lexus rather than a new Ford. That way you won't take a beating on the depreciation.

Of course, paying cash never hurts.
 
msp1911 said:
The primary reason people are upside down is that cars depreciate so rapidly. Cars lose most of their value in the first 2-3 years. It may be a good idea to buy a good used car rather than a new car. For example, buy a 2-3 year old Lexus rather than a new Ford. That way you won't take a beating on the depreciation.

Of course, paying cash never hurts.
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Actually a brand new car begins to depreciate the minute you drive off the lot. It kills me that anyone but a millionaire would ever buy a NEW car. It's just not worth it.
 
Warndalyn said:
Is there any way to get out of them, other than selling the vehicle?
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There really is no EASY way to get out of paying 'upside down', other than to pay the vehicle off or trade it in on a new car with a TON of rebates (to eat up the negative equity).

but there is a way to protect yourself on your NEXT new car purchase.....

Gap insurance....

Most insurance companies will NEVER advertise this, but most offer GAP coverage.. Basically what it is is this, it insures you against the depreciated value of your vehicle...

An example: You go buy and 2007 Tahoe SLT ($50,000.00). A year after you buy it, it's worth $41,000.00, but you owe $49,000.00 on it. You're upside down $9,000.00. If the vehicle was ever stolen or wrecked, the insurance company would PAY OFF the loan, not just what the vehicle was worth. The $9,000.00 'gap' would be paid by that coverage...

But remember, you can only get gap coverage when purchasing NEW untitled vehicles and insuring them for full comprehensive coverage... Gap coverage will make your insurance note higher, but it's worth it (if something ever happens to your car).


 
Gap is the bomb....waiting for the next flood to try it out.



But everyone said some good stuff. But what are you trying to do? Lower car payment? If so go to Lending Tree and let the them work for you on a lower refi rate.

Have the new car itch? Well like Snake said.....You want to get as much rebates and bonus as you can. Find the car you like and go to there website. They have a spot showing what rebates they are currently offering. FYI...sometime you can find a 2006 or 2005 and you will get more rebates on those older years because they are trying to get rid of them.

Just want something else and dont care? Well I have a golden rule. If you have to trade it in....never ever rolled over more then $3000.00 into your new car.

Also, have the sale person give you the price for the vehicle as if you are not trading anything in (point being....dont tell them you have a trade in)

Then when you have agreed on a price let them know you have a trade in...
 
Taylor-Made'90 said:
There really is no EASY way to get out of paying 'upside down', other than to pay the vehicle off or trade it in on a new car with a TON of rebates (to eat up the negative equity).

but there is a way to protect yourself on your NEXT new car purchase.....

Gap insurance....

Most insurance companies will NEVER advertise this, but most offer GAP coverage.. Basically what it is is this, it insures you against the depreciated value of your vehicle...

An example: You go buy and 2007 Tahoe SLT ($50,000.00). A year after you buy it, it's worth $41,000.00, but you owe $49,000.00 on it. You're upside down $9,000.00. If the vehicle was ever stolen or wrecked, the insurance company would PAY OFF the loan, not just what the vehicle was worth. The $9,000.00 'gap' would be paid by that coverage...

But remember, you can only get gap coverage when purchasing NEW untitled vehicles and insuring them for full comprehensive coverage... Gap coverage will make your insurance note higher, but it's worth it (if something ever happens to your car).
Click to expand...


You can get Gap on a previously titled car too. I learned this when I got dragged alone to buy a Cadillac with my parents. That gap is the truth. You don't want to be stuck out there with a car note and NO car.
 
If you have full coverage on a car, you won't be stuck with a car note and no car. And in most states full coverage is required on a new car. Gap is only to cover the difference in value vs. the payoff. I have never been a fan of gap insurance as long as I had full coverage. If something happens to a car that I still have abalnce on, as long as the loan is paid off if something happens to the vehicle. But I understand the logic.....
 
Suge said:
If you have full coverage on a car, you won't be stuck with a car note and no car. And in most states full coverage is required on a new car. Gap is only to cover the difference in value vs. the payoff. I have never been a fan of gap insurance as long as I had full coverage. If something happens to a car that I still have abalnce on, as long as the loan is paid off if something happens to the vehicle. But I understand the logic.....
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In Mississippi, full coverage doesn't mean you will be able to pay your old car off. They pro-rate and value your car on how much it WAS worth when the loss took place. I think All State has a program that allows you to get in a NEW vehicle within three model years of a purchase if it is totaled. Maybe you are paying gap and do not even realize it?
 

Taylor-Made'90 said:
There really is no EASY way to get out of paying 'upside down', other than to pay the vehicle off or trade it in on a new car with a TON of rebates (to eat up the negative equity).

but there is a way to protect yourself on your NEXT new car purchase.....

Gap insurance....

Most insurance companies will NEVER advertise this, but most offer GAP coverage.. Basically what it is is this, it insures you against the depreciated value of your vehicle...

An example: You go buy and 2007 Tahoe SLT ($50,000.00). A year after you buy it, it's worth $41,000.00, but you owe $49,000.00 on it. You're upside down $9,000.00. If the vehicle was ever stolen or wrecked, the insurance company would PAY OFF the loan, not just what the vehicle was worth. The $9,000.00 'gap' would be paid by that coverage...

But remember, you can only get gap coverage when purchasing NEW untitled vehicles and insuring them for full comprehensive coverage... Gap coverage will make your insurance note higher, but it's worth it (if something ever happens to your car).
Click to expand...

i have GAP on the Xterra! best decision i've ever made. i do not want to ever have any more negative nothing(i rolled some over to this purchase), so i'm riding this loan out.
 
I will never buy USED again. I've tried it and it never fails that a used car goes bad on me before I can pay it off.

If you buy a new vehicle, you know the history on it because you have been the only owner.

To me, depreciation doesn't mean anything to me because when I buy a car, I have no intentions of getting rid of it. I will rather DONATE a car to charity, than to trade it in. I have a plan now to not replace a car until it has been in my possession for at least 10 years.
 
I don't care for buying used cars either, unless it's a high-end vehicle. I have purchased one used car before, though. It never gave me any trouble, but I just prefer new vehicles.
 
I only buy used cars. I bought a used truck with 20,000 miles on it and got 250k on it and it is still going.
 
I also believe on keeping my cars for at least 10 years so I don't see buying it as a lost. I drive a car everywhere when I buy one. No renting a car for me. I just keep up the maintenance and roll out. Why buy it if you not gone drive it. Besides highway miles are what keeps your car running. City traffic kills it.
 
CEE DOG said:
I also believe on keeping my cars for at least 10 years so I don't see buying it as a lost. I drive a car everywhere when I buy one. No renting a car for me. I just keep up the maintenance and roll out. Why buy it if you not gone drive it. Besides highway miles are what keeps your car running. City traffic kills it.
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Now, I totally agree w/the latter part of your post. I never understood why folks love to rent cars, when they have a vehicle of their own, that they're paying a car note for. Aren't you already paying money to drive your own car? Folks kill me w/that, "I don't want all those miles on my car." Well, WTF did you buy it for? Just to sit up and look pretty? :smh:

You're right about the hwy miles vs the city miles too. Those city miles are a killer.
 
CEE DOG said:
I only buy used cars. I bought a used truck with 20,000 miles on it and got 250k on it and it is still going.
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you know i almost bout a used Altima back in 03, it was an 03 it had about 20,000 miles on it. i always said if i could go back and change it i would get it. i didn't want it because it was a 5 speed, and even though i know how to drive one, test drove it and everything, i wasn't fond of the thought of shifting gears for the next 5-7 years. boy was on some spoiled shat then. it was maroon too Cee, so perfect for me.... :no:
 
We have been blessed to become a 3 car family, which basically gives us 2 city cars and one weekend/highway vehicle. Soon, we will add another car for the teenager.

250K miles? Man, the Expedition has 130K miles and it is almost 8 years old. How many more years will it take me to get to 250K miles?
 
Warndalyn said:
Now, I totally agree w/the latter part of your post. I never understood why folks love to rent cars, when they have a vehicle of their own, that they're paying a car note for. Aren't you already paying money to drive your own car? Folks kill me w/that, "I don't want all those miles on my car." Well, WTF did you buy it for? Just to sit up and look pretty? :smh:

You're right about the hwy miles vs the city miles too. Those city miles are a killer.
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That's why I can't lease. A girl here is leasing a Nissan Maxima. She told me its a 3 yr lease and she can only drive 36k miles. I looked at her like she was crazy. In Atlanta? Man I can put 150 miles on my car in a day depending on where my errands take me. I couldn't deal with knowing my driving was restricted.
 
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