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KID CREOLE

26 months paid on time....still upside down

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ok so here we are now

BALANCE:

$20,948.18

This is not a Payoff.

 

PAYMENTS MADE:

26

 

MATURITY DATE:

8/23/2013

 

LAST PAYMENT AMOUNT:

$619.77

$14,730 KBB suggested retail value.

 

= $6218 upside down....ok been reading, and from what I understand drive or santander does not allow you to pay down principle? Is this legal/true? if it is then i'm screwed <_< !!! after 10 more months of paying down the $6218 to get proper LTV the blue book value will be less right??

 

what if I traded it in for a car worth $8000 (14730$-6218$) would we be free? I have also read that after 2 years of payments on time your credit score is helped greatly, whats the scoop with that? ANY other suggestions is highly appreciated!

Edited by KID CREOLE

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I am a little confused. What is your goal? To get rid of this car and get another with lower payments?

 

Was this a new car when you bought it? Did you make much of a down payment.? Regardless of what type of car it is, if you buy a new car and put down little money, you will be upside down for quite a while due to 1) depreciation and 2) the way that the total interest charge on your loan is charged against your payments. On most auto loans, the total interest charge is front loaded to the early payments (rule of 78's).

 

This upside condition only matters if you are looking to get rid of the car for some reason.

Edited by chicagorich

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I have also read that after 2 years of payments on time your credit score is helped greatly,

 

Where did you read this?

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I am a little confused. What is your goal? To get rid of this car and get another with lower payments?

 

Was this a new car when you bought it? Did you make much of a down payment.? Regardless of what type of car it is, if you buy a new car and put down little money, you will be upside down for quite a while due to 1) depreciation and 2) the way that the total interest charge on your loan is charged against your payments. On most auto loans, the total interest charge is front loaded to the early payments (rule of 78's).

 

This upside condition only matters if you are looking to get rid of the car for some reason.

 

Thanks Rich

my goal is to one way or another cut my monthly payment in half. I owe 20K on it the trade in value is 9500$.

1)the car was brand new when purchased

2) not really

yea I'm trying to realy get out of the 27% rate ASAP.

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AFAIK Santander does not do Rule of 78 contracts. AFAIK they are all simple interests contracts.

If you want extra money credited to your still unpaid balance then contact your lender and ask them what their method for a consumer to submit principal payments only would be.

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I don't understand your post.

sorry I guess i need to know when the car will be refinancable or tradeable?

 

 

When YOU/Vehicle/Amount fall within approving quidelines.

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I have also read that after 2 years of payments on time your credit score is helped greatly,

 

Where did you read this?

someone on this site posted it?

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AFAIK Santander does not do Rule of 78 contracts. AFAIK they are all simple interests contracts.

If you want extra money credited to your still unpaid balance then contact your lender and ask them what their method for a consumer to submit principal payments only would be.

could i not just use the money to put down on another car with a trade in? let's say I have 2000$ cash, the financed car is worth 9500$(trade in value) and we owe 20000$ on it. The car we would purchase would be aroun.....here from auto trader payment calculator...

 

 

 

*Vehicle Price:7500 $

*Interest Rate (APR):7 %

*Length of Loan: 60 Months

Down Payment: 2000 $ Trade-in Value:9500 $

Amount Owed on Trade-in: 20000 $

Your monthly payment: $316.82

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New car $7,500

+ Negative equity $10,500

= Total $18,000

- Cash down $2000

= Amount of loan $16,000

 

No one is going to loan $16,000 to buy a $7,500 car though. It is almost impossible to trade down while you are upside down.

 

It would be better to try to refinance your existing car, paying the $2000 toward the loan and borrowing the remaining $18,000 on a car that might retail book for $12,000. That also seems improbable though.

Edited by mk_378

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I feel like the issue that the OP is having is similar to many others who buy a car with a high interest rate but swallow the pain of it by convincing themselves that they will refinance it in the future to a better interest rate. Since a car is a depreciating asset, combined with a high interest rate...most people will be underwater as soon as they get the loan. Even with a decent credit score, most banks won't refinance if the LTV is not within their guidelines.

 

Hope you find some resolution with your problem.

Edited by lakbum

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New car $7,500

+ Negative equity $10,500

= Total $18,000

- Cash down $2000

= Amount of loan $16,000

 

No one is going to loan $16,000 to buy a $7,500 car though. It is almost impossible to trade down while you are upside down.

 

It would be better to try to refinance your existing car, paying the $2000 toward the loan and borrowing the remaining $18,000 on a car that might retail book for $12,000. That also seems improbable though.

There is a chance he could refinance the car in a lease and push off the negative equity as residual value. A snowball might make it on a trip through Hell too. :)

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New car $7,500

+ Negative equity $10,500

= Total $18,000

- Cash down $2000

= Amount of loan $16,000

 

No one is going to loan $16,000 to buy a $7,500 car though. It is almost impossible to trade down while you are upside down.

 

It would be better to try to refinance your existing car, paying the $2000 toward the loan and borrowing the remaining $18,000 on a car that might retail book for $12,000. That also seems improbable though.

 

well according to marv refinancing aint happening..I will not even try to work out an arrangment with drive, as for as paying it down goes....way to shady... what would be the "approving quidelines" marv?

thanks for the help.

 

 

I feel like the issue that the OP is having is similar to many others who buy a car with a high interest rate but swallow the pain of it by convincing themselves that they will refinance it in the future to a better interest rate. Since a car is a depreciating asset, combined with a high interest rate...most people will be underwater as soon as they get the loan. Even with a decent credit score, most banks won't refinance if the LTV is not within their guidelines.

 

Hope you find some resolution with your problem.

 

will it ever have the right LTV to refinance, that is the big question? I hope I find the answer as well thanks for the help.

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Honestly, you can probably trade out of your car. We have traded in on many deals while being upside down (is this the best decision? maybe not.). You just have to find the right dealership to work out the deal for you. Be honest and straightforward with the rep at the dealer you're going to. Let them know exactly what your circumstances are and what you want to achieve. It may be best to contact a local credit union or bank to obtain a pre-approval - just tell them you're not sure what car you're looking for just yet and ask them to give you your max approval amount. Let the dealer know what that is and that if they can get you out the door within those paremeters, you'd be willing to talk. ..of course when you're in a neg equity situation, you can't be terribly picky or shop too much like the "smart" shoppers. Sure, you can still negotiate, etc., but you have to take what they have to give (i.e. what will work for the deal) or nothing at all.

 

The way that they can work this deal is by finding a car whose value is not yet on the bank's books (usually NADA guide). For instance, the car I bought and rolled neg equity into was a 2009 Hyundai Sonata V6. I bought the car in July. It had 9,000 miles on it, so it was considered used, and the NADA book had no value for that car at the time I purchased it. If you don't want to go this route, you can always try for leasing...

 

Recently, DH traded in his car for a lease - this, of course, is another option for dealing with negative equity if you don't drive very much and take exceptionally good care of your cars. This is also, of course, the best route to take if you like to change cars - as DH LOVES to do.

 

Don't get discouraged OP. There are surely one or two or more dealers out there that can help you get out of that rough situation. I went from at 15.8% interest rate to 7.59% (could have been lower if I went for 60 month loan instead of 72). Anything is possible, believe it or not...

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THanks mcnugget!

very encouraging words of wisdom. still paying the devil his due ....i wonder if i should aqpply to refinance? it looks like drive financial collects all the interest before paying down principle which means it looklike i will never not be upside down..... i really did not mind paying what i had to too improve my credit but this is getting ridiculous :D

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What LTV% do you need to get it refinanced?

i dunno? was hoping someone would tell me? i just checked the suggested retail value its around 18k and i owe roughly 20k. tell me what i need to do.i bank with bofa i was thinking of just going and talking with them about it?

i cant figure out the page with the ltv you sent me to?

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I have also read that after 2 years of payments on time your credit score is helped greatly, whats the scoop with that?

Really? Crap I paid off my car one month before my two year marker. Wonder if I made a mistake. Same as you, I just wanted to get out from that 15% interest rate.

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I have also read that after 2 years of payments on time your credit score is helped greatly, whats the scoop with that?

Really? Crap I paid off my car one month before my two year marker. Wonder if I made a mistake. Same as you, I just wanted to get out from that 15% interest rate.

well marve does not believe the 2 year mark? i wish i had 15% mine is 27% :D

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Did I read that correctly you are paying 27% interest? That's $15 a day in interest accruing on a 20k account. You said you paid on time, but did you pay every 30 days? For instance, if your due date is the 15th of the month, if you paid on the 10th last month, and the 15th this month, that's 35 days. At $15 a day, 5 extra days means $75 extra in interest.

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I would for sure go to your local credit union and try to refinance the care at a minimum. 27% interest is insane to be paying right now. If you have great payment history on all of your reporting accounts for the last couple years i think you could refinance it through a local bank for a lot less.

 

I do not know your credit situation but, even if you refied for 15% you are saving a TON of money.

 

Dealers are also looking to make a deal anyway they can. If they have a car they picked up dirt cheap at an auction and can roll your negative equity in to that and still get your approved you might want to go that way. But, before you have them pull your credit be sure to tell them up front what the deal is on your car and what you want to do. See if they can help or not. if not move on and try to find another who can if you want to go that route.

 

My personal opinion is you are going to be upside down in a new vehicle or you are going to be upside down in this vehicle. So like I said I would just go a local CU and try to refinance and pay off your vehicle or pay it down enough to where you have positive equity and then swap out vehicles.

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