Here's the situation: SO has a '99 Grand Am. She owes 10500, so she's upside down by about 4000. She can no longer afford the payments ($345), and she's about to be 30 days late on the payment. We'll be looking for a car with payments she can afford (probably a 5-6000 used car), but for now, what do we do with the grand am? Let them repo it, or try to trade it in? I'll be checking out her credit reports shortly, but from what she's told me they will be pretty bad. Given what her scores may be, I wouldn't think refinancing would be an option (I'm thinking she must have a terrible interest rate at the moment). Any ideas would be greatly appreciated.
YOU DON'T WANT A REPO ON YOUR CR! It will probably result in a judgment for the deficiency balance, which will be a new obligation. You don't really want a judgment on your CR either. They are both difficult to delete. If she is only about to go 30days late, call the bank IMMEDIATELY and try to pay the payment now. One 30 day late is better than a repo. However, if she is going to try to get another car or refinance, any lates will be unwelcomed. My reccommendation is to try to keep this car and pay it on time (part time job as I had to do for a time) or if that is not an option, borrow money from a relative to pay it off. I don't recommend anything else because if she sells the car, unless she can get some sucker to agree to pay the balance of the loan agreement, she will have to pay the negative equity amount at payoff I beleive. And if used as a trade-in, the less expensive of a car you get the less they are going to give her for the Grand Am, creating more negative equity, making the prospective next car payment almost as high. I think the best bet is to keep the car, pay down the balance any way possible, unless she has not many dings on her report that she can refinance. But from the insinuation you gave in your post, she has a poor rating. But you won't know until you get her reports and look them over. However, avoid a repo at all costs, even voluntary. It will create many more problems than you want, trust me. Any other suggestions out there?
call the creditor and ask if they will let you skip a month ( don't know what they call it) I did this, they mailed me a form and it is not considered a late it is a good will gesture on there part. Just say you are having a bad month, at lest it will give you a month to figure this out.
Some creditors will allow you to extend the term of the contract by a max of two months. It's a one-time shot, so be prepared to catch up and remain caught up. I do agree that a repo is the last thing you want, BUT, you can negotiate a voluntary surrender. If you do, make sure that it's in writing that it will be reported as such. It's a hit on your credit, but not as bad as a repo.
Would she be liable for the negative equity in the car if she did voluntarily surrender it? As for refinancing, I know her scores will be low since she mentioned a judgement and collections, but I'm not sure yet how long ago those were.
Re: Re: Car help needed,please It's very important to negotiate the surrender such that both sides walk away from the contract with their losses cut. If the neg. equity totals four grand, the lender may want to negotiate something like 50/50, and accept payments on the borrowers 50%. It just needs to be in writing because, as sure as the sun rises, it WILL get misreported.
Re: Re: Car help needed,please Of course. What she owes has nothing to do with the worth of the car. A voluntary repo is just as bad as an involuntary repo. Has she trimmed the fat from her budget? It never killed anyone to go without cable, internet service, cell phone, or anything unrelated to basic survival. If she can do that for the next 6 months to a year, and work a PT job, she might earn enough to overcome the negative equity, and sell the car herself without a remaining balance. When asked how much you can afford, most people quote a number that is usually above their comfort level so they don't lose face in the dealership. To which the dealer proceeds to add $50-$75, and tells you, it's only $X, you can afford that, right? That's a sales trick you don't want to be trapped by. Rectify the current problem before seeking out new credit (refinancing the car is still new credit). I recommend a simple rule for people who can't pay cash for a car: don't let the note exceed the bare minimum you could afford w/ a temp job. God forbid you get ill, or laid off, your reduced income should be able to cover the basics. www.dinkytown.net has an auto payment calculator that she can use to project different scenarios.
Re: Re: Car help needed,please I agree with everything, with the exception of repo being equal to voluntary surrender. A person could be current with their contract or lease and still need to surrender a vehicle for one reason or another. Thus, a person with no lates and a voluntary will get every benefit of the doubt under a subjective credit review rather than someone with 90-day lates and a repo.
My suggestion? From experience, get as far away from repossession territory as you can. How many miles does the car have on it? Try to sell it outright. Advertise it. I know you said she's upside down on it, but it's a Grand Am. She lost 2K as soon as she drove it off the lot. As others have suggested, in the meantime IMMEDIATELY call the bank and explain the situation and ask for at least a 30 day extension. Depending on policy this will probably be granted especially if she's never been late before. Also- take a knife to her budget as was suggested. Then comb the ads. Find something for a couple of thousand bucks that has a good track record for longevity and good mileage.....imports are good s/a Toyota Camry, Honda Accord.....but it's been my experience that a Chevy Cavalier will run forever. I hope this helps. I know it's frustrating.
Then comb the ads. Find something for a couple of thousand bucks that has a good track record for longevity and good mileage.....imports are good s/a Toyota Camry, Honda Accord.....but it's been my experience that a Chevy Cavalier will run forever. I hope this helps. I know it's frustrating. doublejae ============ I bought a 1983 Dodge D-50 pick up in 1991 drove it for 12 years till the frame collapsed on it at 208000 miles in 2003. My cost was exactly 100 bucks a year for this vehicle. Turned out to be one of the best if not the best deal I ever made on a vehicle. I replaced it with a 1986 Dodge D-50 nearly like the 83 even the same color of gray. This truck has 98000 miles on it. The motor in it was an oil burner so I had it rebuilt at 96600 miles & put 4 new tires and a complete exhaust system on it back in JULY. Interior is good and the body is way above average for an 86. If I get 12 years out of this one like I did the 83 I will have a cost of about 300 a year for it. Admittedly not as good as I did with the 1983 , but still not to shabby. If I get 208000 miles on it like I did the 83 then it's good for another 110000 miles. THE END ** *** ** LB 59 """"```--~~~~~~~~~--```'""'''
