# Negative Car Equity- Seeking Advice



## bflis (Feb 3, 2015)

So I purchased a new truck about a year ago. Falling for the 8 year loan trap I am stuck with some negative equity, despite my down payment.

I am now seeking to sell my vehicle and buy something a little more practical. In the 15-20,000 range.

If i sell my truck privately I will still be shy of $8000 to pay off the loan in full. My question is will my bank relieve the leon and give me an unsecured loan for the difference?

I do not want to trade my vehicle in as the depreciation hit would be too much.

I still can afford my truck but wish to no longer make such high payments. If I can get an unsecured loan I should be able to lower my payments by at least 150/month and shorten my amortization.

Any advice would help thanks!


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## gardner (Feb 13, 2014)

What sort of loan do you have on your truck? Is it from your bank or the manufacturer or dealer? What's the interest like? Does it have early or accelerated repayment privileges?

Whether you can get a cheaper loan depends on what the cost of the existing one is and whether you can pay it off, as much as it depends on what new loans might be available. Generally the best rates you will get is via a HELOC, if you have equity in your own home.

Regarding negative equity, I would never have thought there was any other kind in a vehicle. They never have resale value worth what you pay for them and the value drops faster than you can pay the loan. Personally, I do not believe in borrowing for a vehicle -- if I can't save for it, I can't afford it.


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## Ag Driver (Dec 13, 2012)

Deleted.


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## bflis (Feb 3, 2015)

Unfortunately not if I had some cash I would have made a larger down payment. My loan is currently sitting at 53,000 (i know don't judge) i could easily sell the vehicle for 43,000. I am looking to have a loan of 8-10k on the difference. My loan is through BNS.


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## Ag Driver (Dec 13, 2012)

Deleted


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## Homerhomer (Oct 18, 2010)

why not buy something more practical in the 6-8K range? you may get a small basic car that is 5 year old which should get you through another 5 years.


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## FinancialFreedom (Aug 18, 2015)

I think your best bet would be to talk to the bank, see if you'd be able to get the remainder of the loan rolled into a new loan on a $5000 vehicle after you sell your truck privately. Drive the $5000 vehicle into the ground and pay it off as soon as you can. Like others said use this as a learning experience.


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## OptsyEagle (Nov 29, 2009)

bflis said:


> I do not want to trade my vehicle in as the depreciation hit would be too much.


You have already taken the depreciation hit once you drove it off the dealer parking lot, put the current mileage on the car and allowed the clock to continue to tick. At this stage the only issue is who do you pay the bill to.

With the dealer trade in, at least you save the sales tax on the remainder value of the vehicle. Sold privately you do not. That is the theory anyways. I am sure the dealer will do their best to confiscate the tax savings by overcharging you for your next vehicle. That is dealer operating procedure 101.


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## nobleea (Oct 11, 2013)

OptsyEagle said:


> You have already taken the depreciation hit once you drove it off the dealer parking lot, put the current mileage on the car and allowed the clock to continue to tick. At this stage the only issue is who do you pay the bill to.
> 
> With the dealer trade in, at least you save the sales tax on the remainder value of the vehicle. Sold privately you do not. That is the theory anyways. I am sure the dealer will do their best to confiscate the tax savings by overcharging you for your next vehicle. That is dealer operating procedure 101.


In some provinces, there is not tax on privately sold resale vehicles. Selling privately will almost always net you more money.
However, going to a dealer would help with the financing. They're all experts in getting someone from an upside down equity loan to an even bigger upside down loan. You would have lower payments.


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## lost in space (Aug 31, 2015)

Been there bought the T-shirt and burnt it. The goal isn't just getting out of negative equity but turning around your finances. We had a similar amount of consumer debt so what I did was to start reading frugal living and get out of debt blogs. I didn't follow their advice 100% MMM is a bit to hard core for me but it allowed us to turn our finances around completely


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## OptsyEagle (Nov 29, 2009)

nobleea said:


> In some provinces, there is not tax on privately sold resale vehicles. Selling privately will almost always net you more money.
> However, going to a dealer would help with the financing. They're all experts in getting someone from an upside down equity loan to an even bigger upside down loan. You would have lower payments.


I was referring to the reduction of sales tax on the newly acquired vehicle whose price is reduced by the value of the trade in.


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## sags (May 15, 2010)

Keep the vehicle and continue with the payments. Get a part time job if you have to.

Any other decision will make your situation worse.

Buying a cheaper vehicle with an additional $10,000 debt added on..........at a much higher interest rate and no warranty, is a recipe for financial disaster.


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## venkata (May 30, 2017)

*Same here for Negative Acquity*

Hi,

Same here too. I initially purchased a car 2012 small SUV FWD for 29% interest from First Access bank. that was a mistake which I did in my life. But I traded it for the newer model 2016 for 12.9%. I owe around 30K now after 1.5 yr and with every negative acquity. Now the car itself doesn't cost more than 18K. Dealer wants to give only 14K if I traded for 2017 slightly bigger SUV. Now if I look at the new one proposal by the dealer, he is quoting it for total 51K with my negative acquity, his discounts etc. Actual price of the car is 35K on road with all its features. the interest rate would be 3.65% for the loan. Now, i am in a dilemma whether i take it or not, I prefer not to burden overburden but Im completely helpless to what to do. The dealer is telling me that for this rate of interest, 3.65%, I will be in prime rate guy and will be helpful for future home loans or some others etc. Is it true?. till 1.5 year on 2nd vehicle, I paid a lot of interest without any mispayment. Now my job is doing good and will continue for more than 5-10 years at a stretch. Where does this money go?. I just had a few hundred dollars debt on old cards and tehy are written off total of 1000$ with interest. For that is the bank system that much unworthy of taking a lot of interest around 8000$. I m too vexed about this. Is there any way to get out. Now the 2nd vehicle I am having is like a white elephant to me for the car worth and the loan I pay. Its like driving normal car paying for a benz. What is this financial system. I need a solution for this.
Everybody is just cursing me that i have a high interest, have to get out, I m not at all seeing any lower payments if we want to switch vehicle, Its looking like I m stuck with high loan for a low priced car.

is there any umbudsman procedure to sue the bank. these bank people can't talk to me directly,deal with only dealer finance managers etc. Can you show me any solution from experts advices.


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## andrewf (Mar 1, 2010)

^ Hey james, maybe move this question to a new thread to be fair to OP.

venkata, I think you should try to get a handle on your credit situation. You can find out your credit score for free. If I were you, I would finance my car using a LOC from a bank and pay it off as quickly as possible. If you can't pay it off 12-24 months, you need a cheaper car. I would stay away from dealer financing for used cars. I think the dealer was telling you a tall tale about the 3.6% rate making you a 'prime' borrower. That is driven off your credit score and financial situation, not just the rate on a car loan.


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## Ponderling (Mar 1, 2013)

I have always bought used vehicles from my savings, and drive them into the ground, usually until they become too unreliable for my needs.
Usually a 4-6 year old car/light truck is 'new' to me, and old after it is 14-16 or more years old. 

Now on this thread I see how new car dealerships stay in business, from people in the universe who have different values and priorities.


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## Lost in Space 2 (Jun 28, 2016)

venkata said:


> Hi,
> 
> Same here too. I initially purchased a car 2012 small SUV FWD for 29% interest from First Access bank. that was a mistake which I did in my life.


First step is to not compound your mistakes!!!!!

Secondly when faced with situatations like this is When faced with situations like this is what I do is to create a mental matrix listing all the points I want to cover. When I needed to upgrade our car I listed all the things my heart wanted - new, fully loaded loads of power and of course prestige. Then listed all the things that my budget wanted. Something cheap to run and insure In the end the wife and I settled on a C-Max (live in Germany so slightly different vehicles) which we got at a steep discount and I’m super pleased. Around the same time my sister in law was looking to upgrade and insisted on brand new, now she’s stuck with a car she hates and an 8 year payment plan!
In your case it would be the pros and cons for each point. Keep, sell privately, trade in trade up, do without a car buy a fully depreciated one etc. Second point is to ask what one will get me to debt freedom the fastest. 

@Bflis any updates?


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## tyhatts (Nov 27, 2013)

venkata said:


> Hi,
> 
> Same here too. I initially purchased a car 2012 small SUV FWD for 29% interest from First Access bank. that was a mistake which I did in my life. But I traded it for the newer model 2016 for 12.9%. I owe around 30K now after 1.5 yr and with every negative acquity. Now the car itself doesn't cost more than 18K. Dealer wants to give only 14K if I traded for 2017 slightly bigger SUV. Now if I look at the new one proposal by the dealer, he is quoting it for total 51K with my negative acquity, his discounts etc. Actual price of the car is 35K on road with all its features. the interest rate would be 3.65% for the loan. Now, i am in a dilemma whether i take it or not, I prefer not to burden overburden but Im completely helpless to what to do. The dealer is telling me that for this rate of interest, 3.65%, I will be in prime rate guy and will be helpful for future home loans or some others etc. Is it true?. till 1.5 year on 2nd vehicle, I paid a lot of interest without any mispayment. Now my job is doing good and will continue for more than 5-10 years at a stretch. Where does this money go?. I just had a few hundred dollars debt on old cards and tehy are written off total of 1000$ with interest. For that is the bank system that much unworthy of taking a lot of interest around 8000$. I m too vexed about this. Is there any way to get out. Now the 2nd vehicle I am having is like a white elephant to me for the car worth and the loan I pay. Its like driving normal car paying for a benz. What is this financial system. I need a solution for this.
> Everybody is just cursing me that i have a high interest, have to get out, I m not at all seeing any lower payments if we want to switch vehicle, Its looking like I m stuck with high loan for a low priced car.
> ...



I hope this is a joke. Your blaming the bank and car sales for your lack of financial discipline ????? You want to sue the bank for making to much interest off of you, YOU, the person who signed the contracts laid in front of you. 
Your don't need to trade vehicles every year or two years. Why you are even TALKING to dealers about trading vehicles is beyond me. Your just compounding interesting and negative equities year after year. 

29% interest for a car loan is absolutely ABSURD !!!!!!!!!!!!!!!!!!!!!!!! Trading a couple years later for a vehicle @ 12.9% ?? Now your financing the INTEREST you had on your 29% loan.... NOW you want to buy ANOTHER vehicle.... Financing BOTH the past loans ( and their interest ) @ 3.7% ......... 

"it looking like Im stuck with a high loan for a low priced car" ..... And by no ones fault but your own.


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## banjopete (Feb 4, 2014)

To the OP, I'd second the chalk it up to a hard lesson sentiment. Continuing to make payments on a truck like that that you don't need is not the way either as the actual total amount you'd spend servicing this over 7 more years is much more than the 51k on the loan. I'd swallow the big spoonful of humble pie, sell the vehicle for the best price you can get, and think really hard about what a vehicle means to you. Making payments on an 8k loan for nothing will remind you every month how badly you don't want to do it again.

Despite what many people these days believe (and has been debated at great length here on the forums) you can find great value in used inexpensive cars that are cheap to operate, cheap to maintain, and cost you probably as little as one month's to a few month's of your truck payments. You can find a honda civic, toyota tercel type car for $1-2k pretty much everywhere, they work great for basic vehicle needs, if you need a truck, a 4cyl ranger, type thing can be found for $2k most anywhere as well. They might not be pretty but they work just the same way a 50k one does just without the crazy payments. 

Just to give a little anecdotal evidence, I bought a $1k beater truck for home reno stuff about a year ago. After a brief search, I found a single owner, 176k, 5 speed, with no brakes. $20 later for some brake line and fittings, it works great, drives, stops, holds things, and I don't have to care about it one bit. I take great pride in loading the "golden girl" up full of lumber next to guys making $1,000 per month payments on their new truck doing the same thing. I could probably buy 60 of my trucks for what you might have paid for yours at the end of the loan. Think about that....


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## sags (May 15, 2010)

Good luck selling the truck without paying the loan off in full.


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