I made a dumb move when I was younger and went for a newer car thinking it was a good idea. Now, I have more bills piling up, and with almost $500 a month in payments, I barely save anything. I’m super upside down—owe about $20k on a car worth only $10-11k after a year and a half. Is there any way to legally get out of this and into something cheaper with lower payments? Or should I just keep this car and deal with it since I’ll still be upside down if I go for something older? Any advice would be appreciated, thanks.
One option is to get a $10k loan to cover the difference and sell it privately instead of trading it in.
Perrin said:
One option is to get a $10k loan to cover the difference and sell it privately instead of trading it in.
Where would I look for that kind of loan, and what type of loan would it be? Thanks for the idea!
@Bao
Try a credit union and ask about a personal loan. Is your credit decent?
Perrin said:
@Bao
Try a credit union and ask about a personal loan. Is your credit decent?
Yeah, my credit is good. But I don’t have enough saved right now to buy something else to drive. Would it even be possible or smart to take a $10k loan to pay this off and then another small loan for a used car?
@Bao
Honestly, without a big down payment, you won’t get anything much cheaper than $500 a month. You’re probably better off keeping the car and paying it off faster if you can.
Selling it privately with $10k of negative equity is tough—no one wants to deal with a lien. A dealership might buy it, but you’d still need a loan to cover the negative equity, and then you’d need another loan for a cheap used car. That’s almost the same as sticking with this car. Maybe look into cutting expenses or picking up extra work to pay it off faster.
@Bao
You’ll probably need around $3k to buy a decent used car. It won’t be fancy, but it can help you reset financially. Drive it for a year, then upgrade once things are better.
Perrin said:
@Bao
You’ll probably need around $3k to buy a decent used car. It won’t be fancy, but it can help you reset financially. Drive it for a year, then upgrade once things are better.
These days, $3k cars are more like $5k minimum. Prices have gone way up.
@Axel
I have a 2011 Sonata I’d sell for $3500. You can find deals, but you’ll need to do some digging.
Perrin said:
@Axel
I have a 2011 Sonata I’d sell for $3500. You can find deals, but you’ll need to do some digging.
Those old Sonatas are solid! My mom had a couple, and they lasted forever.
Perrin said:
@Bao
You’ll probably need around $3k to buy a decent used car. It won’t be fancy, but it can help you reset financially. Drive it for a year, then upgrade once things are better.
Honestly, I’m not too concerned about how it looks. Just cutting that $500 payment would be a huge relief. I’ll definitely look into that loan idea. Thanks so much for your help!
Depends on where you live, but $500 a month for a car isn’t terrible, especially if it’s new. If you sell it, how will you get around—public transport, rideshares? A cheaper car could mean more repair costs too. If you’ve been paying for over five years, maybe try refinancing or consolidating your debts.
@Devi
I was thinking of getting something cheaper, like a $3k or $4k car, just to get me to work and back. Cutting that $500 would be a big help since I’m already struggling. The car isn’t even that new—it’s a 2016 Edge with almost 100k miles. I commute an hour each way for work, so the mileage adds up fast. The payment might not seem bad, but my income isn’t high enough to afford it along with rent and bills. If I want to save for a house or start a family, I can’t keep going like this. Besides this car, my only other debt is $1500 on a credit card, which I’m trying to pay off after holiday expenses and some unexpected stuff breaking. So, about $20k on the car, $1500 on the card, and only $3k saved. Just trying to figure a way out of this mess lol.
@Bao
Sounds like you’ve got a clear picture of what you need to do. Best of luck getting things sorted!
What’s your interest rate? I’m trying to figure out how you still owe $20k on a 2016 Edge unless the rate is super high.
Wynn said:
What’s your interest rate? I’m trying to figure out how you still owe $20k on a 2016 Edge unless the rate is super high.
Same thought here. If the rate is really high, maybe look into refinancing with a credit union. A lower rate could help, and they might extend the loan term to lower your monthly payment too.
@Sloan
With that much negative equity, I don’t see anyone approving a refinance.
Wynn said:
@Sloan
With that much negative equity, I don’t see anyone approving a refinance.
Haha, fair point. I wasn’t fully awake when I posted that. Gotta wake up properly before giving advice lol.
Wynn said:
What’s your interest rate? I’m trying to figure out how you still owe $20k on a 2016 Edge unless the rate is super high.
It’s 7.39%, which isn’t great. Honestly, I rushed into it. I had a junk car that was falling apart, and I could afford a payment, so I jumped in without thinking long term. I bought a cheaper car first but hated it, then swapped for this one. The negative equity from that trade-in put me in this hole. I’m learning now not to make these impulse decisions anymore.