February 08, 2006

Hi Tony

I am writing because I truly need advice in my situation.

I have a 2005 Envoy Denali that I purchased in June 2005. My problem is that when I traded in my car, they only gave me $13,000 for it, and the loan to pay it off was like $28,245.59 (I had a car and a motorcycle in this loan). Just looking at the numbers you see what predicament I am in now. I got a "BAD" financing rate of 13.5%.

The advice I need is, I have tried to refinance the car but no one will do it with the amount of negative equity that I have. What can I do to get it re-financed? If it is to pay down the loan, how much do you think I will need?

Thanks for you help,

Sherry

Answer:

Hi Sherry,

No bank or loan company is going to refinance the vehicle with that kind of a payoff. I don't know your exact payoff, but I'm sure it's through the roof.

You said there was a motorcycle loan in on the original payoff. Now that you have a clear title on the bike perhaps you can refinance it and put the proceeds towards refinancing the Envoy. Of course then you'll have two payments, so that may not be of much help.

The only other way to refinance it without coming up with a ton of money would be to perhaps do a second mortgage on your house if you have that option. This way you could pay off the car loan and the payments would be smaller due to being able to spread them over a longer period of time, and of course hopefully, with a more reasonable interest rate.

Other than that or coming up with probably $15,000 plus in cash you'll just have to keep making the payments. If you don't they will repossess the vehicle, your credit will be ruined and you will still owe the bank a fortune, because they'll turn around and sell the vehicle at auction and you will still be liable for the difference between what they sold it for and the amount that you owe. Plus extensive fees to boot!

This is what's called "Being stuck between the proverbial rock and a hard place!" I wish you luck!

All my very best...

Tony Iorio