Question: My fiancee traded two cars with negative equity for the one he is currently paying $750 a month on. Is there ANY way for him to get out from under this?
January 31, 2006
Hello Tony
Great website! I'm impressed with your thorough answers.
Our situation is this: my fiancee had two cars from his previous marriage and traded them last year to get his current vehicle. There was still outstanding equity on the previous cars, which means that he is now financing his current car plus the remaining equity from the other two, and his payment is around $750.
What are his options? Can he sell the vehicle, apply the proceeds from the sale to the loan balance, and roll the remaining balance into consolidation?
I assume if he tries to do that through the dealership, it will be considered a voluntary repossession. If he does it through a private party does that constitute a violation of his secured finance contract?
Is there ANY way to get out from under this?
Thanks!
Beth
Answer:
Hi Beth,
I appreciate your kind words about my website. Thank You!
The only choices he has are to pay off the loan - either through continuing to make the payments, or by selling the car for what he can get and coming up with the balance to pay off the loan, or he can give the car back to the bank and he will have a repossession on his credit record.
Once he has a repo on his record his credit will be shot. Forget about getting any other credit from anyone - including credit cards, home loans, etc. Also, if he gives the car back not only will he have ruined his credit, but the bank will sell the car at auction for whatever they can get for it and come after him for the remaining balance plus extensive fees.
If he does find a buyer for the car he will have to give the new owner a clear title to the car which he can only get by paying off the loan. So if he is going to sell the car for part of what's owed on it he needs to have arrangements made in advance to come up with the remaining balance. If he has property he can borrow against he could get the money that way, but however he does it he's still going to pay for the car.
There's no easy way out of this. His best bet is to continue to make the payments until the car is paid. He may want to consider finding a way to supplement his income so he can more easily make the car payment.
All my very best...
Tony Iorio
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