Hi I was wondering if someone could give me advice. I have a 2000 Mercedes that I bought for 65k. I put 15k down and somehow, my payoff as of today is about 52k. I think my mistake was taking the balloon payment which had me making payments of 1050/mo for 5 yrs with a 37000 balloon at the end of 60 months. I still can't figure out how the math works on that. Anyway, I just can't deal with the payment on this car anymore, and since it has 80k miles, it's worth about 30-35k retail. So I'm upside down 15-20k on it. Should I turn this car in, or let them come pick it up or just hide it and drive it? My scores are pretty horrible anyway (mid 400's) due to some judgements but I'd really like to buy a house in a year or two and there's no way I can pay off 20k. Not to mention, I'd like to get another vehicle loan so I'll have something to drive once this car is gone and if this goes down as a repo, I'm worried I won't be able to get one. I'm just starting the process of getting my credit back on track, I'd appreciate any help someone can give me. Thanks!
I hate to have to be the one to tell you this but...If you stop paying and take the repo and upside down hit, you will be sued and have another judgement on your credit report to deal with. Also with scores in the 400s you'll be lucky to even get a car loan let alone a mortgage. I don't mean that in a disrespectful manner because god knows I've been there. Even if you continue to make the payments you will still probably have to pay the other judements before any mortgage company would consider giving you a mortgage. Your best bet is to continue to make the payments on the car or and I hate to say this...File for BK before the new BK reform bill goes into effect. Agin if you stop paying, the car will be repo'd and your credit will take another hit, you will most certianly be sued for the difference. Man I just can't understand how or why someone would want a 65k car?? Makes no sense to me since the car's value takes a nose dive the minute you drive it off the lot. That is of couse unless it is a Bentley or Rolls, but then if you owned one of those cars chances are you wouldn't have a speck of problem with credit. I'm sorry i couldn't be of more help but that is my take on what you've told me. Tac
If you want the truth, here it goes.... You have two possibilities right now if you want to clear this mess up and buy a house: 1. Win the lottery or inherit enough money to pay off the car and judgements. 2. File bankruptcy. If you don't suddenly come up with a huge amount of money, you're just going to keep spinning your wheels until you eventually file for bankruptcy. My advice is for you to just get it over with and start fresh now. The sooner you file the sooner you can start over and buy a house. Go see a bankruptcy attorney and file. If you do it properly, you'll still be able to drive the Mercedes for 4-5 months until the bankruptcy is discharged. Best of luck.
I would have to agree with the last poster. Unless you win the lotto or become otherwise wealthy, bk will be about the only thing to save you. It will suck right after because you will probably have to deal with some degree of sub prime credit. I understand many creditors will be BK friendly. For instance Ford credit is supposed to be a good place to finance a car very soon after BK. There are others also. I also must agree with the other poster as to buying a new car for $65K+. Trust me, I love a quality car too! but would Never dream of buying one new. There are great deals out there. I just bought a 2000 BMW 750il for $29,000. had only 42000 miles and no negative history either through BMW or carfax databases. This was an exceptional buy. Generally you can find these for more in the $38K neighborhood, but I found a dealer who basically got it through the lease return auctions and he made a quick turn over. 2nd rule to not buying new is to not buy at the franchised dealer. That doesnt mean go by though a cut throat car dealer who operates on the corner in a bad neighborhood and his entire stock has 15 cars, 11 of them older and less desirable. Chances are at a place like that there is increaded chance for trouble. But there are Many non franchised reputable car dealers who sell high line cars. A reason why they sell so many high line cars? Because they buy from the auction. At the auction there can be hundreds of lease turn ins from all the big high end makers. This element means that theres enough flash to go around for all the hungry dealers and seldom any two of them knock each other out trying to get a particular vehicle, thus keeping the price down. Always best to get the car's VIN# and run it through not only Carfax, but the manufacturers computer which can be accessed at just about any franchised dealer. Reason being is that the car was 99% taken to the dealer for repairs during the warranty period. Makes sense.. would you take your new BMW to Joe Blow's garage and let him ream you on repairs, plus maybe screw the repair up because he is only familiar with GM cars? Of course not. Dealer service center computers are very good for giving a list of any issues the car has had in the past. If you get a green light from checking the car out through the computers then you have a great shot at nothing being wrong with the car. Don't think you have to go to a franchised dealer to get a relaible high end car. The only thing you can depend on from the franchised dealer is that they will mark the vehicle up to Nada or Kelly blue book retail. They figure if Kelly blue book says its worth that, and since the bank will use that guide as a determination of loan value, they will charge that much. Often time non franchised dealers will be as far as 30-40% under Nada or Kelly. Those are extremes of course. You can usually depenmd on a solid 17-23% below. Overall point of course is Never buy a car new unless you can afford to pay. In the case of a pricey Mercedes or BMW, it is really only prudent to full finance their entry level cars (i.e. It is reasonable to finance a BMW 3 series new for the full amount, but incredibly stupid to full finance a 750il) The 750il I bought originally stickered at nearly $100,000. I dont care how nice the car is, I wouldnt have paid over 30K for it to finance. If I were overly wealthy Id still probably buy a 2001 750. But that might hinge more on my dislike for the new 7 series BMWs. I think they took a step backward when they put the latest ones out. And I understand that new 760 model sells commonly at dealers for $140,000! Obviously pay cash for it or screw yourself. I hope Im not sounding too critical, but fullfinancing a car for over 30K will probably not be the greatest move. But BK does sound like the answer for you. Id do it over a repo. because more auto lenders may see a repo despite being dismissed in bk as bad. I know they arent supposed to judge or count what you had dismissed in bk but Im pretty sure if a human lender sees it, a repop won't win you any favors! Good luck!!
The only thing you can depend on from the franchised dealer is that they will mark the vehicle up to Nada or Kelly blue book retail. They figure if Kelly blue book says its worth that, and since the bank will use that guide as a determination of loan value, they will charge that much. RichardS45 ========================== Another thing never buy a car that you can't insure for full cost.
Thanks for the responses - I guess BK is going to be my only way to go, I had hoped I could avoid it by figuring out how to avoid responsibility for the deficiency on a technicality. The car I had was a 2000 ML55 but I should have done the straight purchase instead of a balloon. I'd probably have equity in the car instead of being so far upside down. (I still don't get it - put 15k down and have paid over 36k over the last 3 yrs and I still owe 51k on a 65k car). BK is going to be complicated for me, I had a 7 discharged in 6/98 so the soonest I could file is 3/04. There is a certain amount of truth to the criticism of BKs, 2 yrs after mine I went out and did this to myself and look where I am again. I wish I had found this board years ago. Anyway, guess I'll just have to take my medicine and file a 13. Thanks for the help and the time you guys have spent to respond.
Im not totally familair with the ins and outs of balloon type financing aside from the little surprise of the balloon payment. But if you put down that much and paid that much per month you must have gotten screwed somewhere on the points. Something seems pretty whacked if the person holdiong the title is prime.
With scores in the 400's it probably isn't prime. Bought for 65K less 15K down payment = 50K financed. 52K balance now? What is your interest rate?
Ah, thats right. I was not likely prime. Whoa cowboy! Not to be critical but you bought a $65K car with sub prime terms?? Ouch! Who gave you a note with scores in the 400s? I didn't think anyone at all could pull an auto loan with Fico in the 400s, I know 15K down probably helped, but still in light of the car pushing 70 grand in value the 15K down still was way under 25% down. I would think (and Im sure I could be wrong) that with scores in the 400s they'd make you put like 50% down. And certainly not to put salt in the wound, but I am curious how you though you were going to be able to come up with 37K balloon when it was due? Please don't be offended, I just want to understand if you knew what you were getting into, and if so, did your state of finances just change drastically over time or did you simply bite off more than you could chew? Again, not trying to be critical as it happens to most everyone from time to time. Just trying to get a clearer picture.
Go with a Chapter 7 bankruptcy and be done with it. Just wait until you can file again. Don't mess around with the Chapter 13...you'll be paying things off unnecessarily. Ironically, once you file bankruptcy, your credit score will probably go up.
You'll be able to get more credit with a BK then with the scores and loads of debt you have now. You might actually be able to save enough money to get a home in a year or two, with the BK. Tac
