my freind recently lost his job due to a plant restructuring and can't get even come close to the same pay anywhere else around the area, so he wants to go back to school to complete his degree and get into the managment side of things.

his dilema is he has a big car payment and owes about 7 grand more than the car is worth.

what would be the best way to get rid of the car? my suggestion was to trade it in on something very cheap and see if they would finance the rest that way it woulod get the payment more in line of what he can afford.

he has another job now but the pay isn't good, just good enough that they woulod finance him.

thanks for any advice.

 

Pull out in front of a truck.

Seriously, rolling the difference into another car is just going to postpone the problem. I don't know of a way to get out from under it.

 

It's a really poor investment, but if he owns his house, refinance and pay off the car. That's about the only way to get out from under at this point.

 

no, he doesn't own anything, just rents, unfortuntly. he is really needing overall a cheaper payment each month to make ends meet.

 

I knew a guy at a dealer who would "get rid of your car" for you.... usually empty feilds, gas matches... This guy was nuts

 

Besides the fact it is illegal, and a dumb thing to get caught for (if you get caught) wrecking it would work! IIf I was your friend I would just sell it, pay the loan off, and use the extra cash, if any to buy a beater till he can afford something else.

 

You missed the part where he is $7000 upside down on the loan, so if he sold the car he would hve to come up with $7000 extra to pay off the note so he could get the title for the new owner.

 

Good point... unless he has A++++ spotless credit, nobody is going to loan that much over the value of the car.

You typically get up to 125% of the retail value of the car, plus TT&L. They won't finance that much over.

 

Correct, thanks for pointing that out, had one too many fte pages open at once and didnt catch that part!

 

Well, this way isn't the best but it can work:

Turn the car in for a voluntary repo, then file bankruptcy (can be done for about $500) when they come after him for the balance owed.

Then kiss the credit rating goodbye...

 

Dan, they changed the bankruptcy laws a year or so ago so not so easy anymore. But as far as kissing the credit rating goodbye, not as bad as you would think, I was forced to file bankruptcy 7 yrs ago, due to a Divorce, stealing lying cheating wife, and huge debt much of which wasn't mine (she was forging my name on credit cards and giving them to her boyfriend, or furnishing his house with them) and a lot was mine too which without the previously mentioned issues I would have gotten paid off, but i wasn't paying thier bills or paying to furnish thier new house (and the fact tha she stole enough from my trucking company to buy a new pickup, and build a new barn) well after 7 yrs my credit rating is back over 700, not bad with a bankruptcy listed on it for another 3 yrs.

 

If your friend can stick it out until Halloween, he might get lucky where one of his neighbour's kids are up to no good and accidentally burns his car to the ground. The day before or the day after Halloween looks suspicious though.

 

Also weigh in the fact that most insurance comapnies and many employers (potential and current) look at your credit rating and make decisions based on what they find.

 

The other ignorant part about illegally wrecking or getting rid of the car is the insurance will only pay wholesale.........the guy would still owe even after it's "totalled".

IF a dealer would roll the $7K into a new loan.........I've seen it done........it would usually have to be on a higher end or more expensive vehicle. They're not going to roll $7,000 extra on a $8,000 KIA. Either scenario isn't going to lower the payment.

As far as a voluntary repo..............same boat. After the bank wholesales the car, he STILL owes the deffiency.


Here's the ONLY way out...........and it's a HUGE gamble...........get someone he trusts to assume the payment.

The 3rd party needs to make the payment to your buddy directly.

There are insurance problems and reg. problems with this type of deal(basically he's "lending" the car out for a couple years, EVERYTHING is still in his name)....but it's the only way of getting out of it without paying the negative equity.

 

This is a little slippery, but I've seen it work. Buy something late model and affordable before he gets behind on the big negative, then just let the big loan go back. In theory he'll owe the deficiency, but lets be realistic- he's a renter, probably no savings or anything of value.... what can they take? Credit will go to poop, but time heals all sins- including that one. He needs to check the state laws to see what personal things a creditor can take- it varies wildly.

It's not a great strategy, and not without risks- but the more desperate the situation, the less risky it actually is. The key is to execute this before everything credit-wise goes to heck. He's also going to have to like (or learn to tolerate) whatever he buys, because it'll be awhile before he can think of financing anything again with a repo on his record.