What should I do if I owe more on my car than what it's worth?

Question

My monthy payments are outrageous so I can barely afford it. My credit is horrible which is the reason the interest is so high. The car is only a few years old, but I owe several thousand more than it's worth.

Answer 1

Just keep making the payments until it's paid off. When you can, put any extra money towards the principle to lower the amount of interest you pay. It will help build your credit so future interest rates for you should be lower as long as you paid on-time, everytime. Chalk it up to a lesson learned - most of us have been there.

Since you are upside down, it's unlikely you could sell it.

Don't go to a place that will "wrap up the payments" with your current car into a new car loan. You are only paying the difference of over a longer period of time. That leads to a vicious cycle of always being upside down on your loans.

The last is to join a Credit union and refinance it to ease your monthly payment, but that's a long shot as they rarely finance more that it's worth.

Answer 2

that is the trap the bad credit/no credit car dealers get customers stuck in. you need a car so they can charge you outrageous interest and monthly payments (sometimes even bi-monthly payments) and either you are going to pay or they are going to get the car back and sell it to someone else. If you have been paying on the car on time for the a couple of years I would look into your local credit union. most credit unions have programs for less than perfect credit. you will find that the interest is rarely higher that 8% where some bad credit/no credit car dealers charge up to 29%. it is worth a shot, you need a car but it sounds like you are being taken advantage of.

Answer 3

Well you have several choices;

1. Continue to pay them and improve your credit

2. trade it in on a used car and have them roll over any amount you're upside down on and hopefully this will lower your overall car payment.

3. Get another car (a cheap one this time) with your horrible credit (don't trade in your other car yet), hence lower car payments. Then just stop paying on the other car and let the bank repo the car. Yeah you'll have the bank harassing you and creditors calling you but who cares, you've accomplished your needs (a car with a lower payment).

4. Find a sucker to buy the car at what you owe on it (young kid with no credit). Just let him take over payment.

Answer 4

your dilemma is not that uncommon. so many folks look at a new car and say "I want It" and they sign on the dotted line. as soon as the car is a year old the value of the car depreciates faster than the payments. It Is a fact of life. just keep paying and keep paying. sooner or later the payments will end and you will have a worthless car. next time you are looking for a car you had better look at your future but you sound like a nice lady so I wish you luck

Answer 5

Learn from this experience! Don't get in over your head! Make your choices more carefully next time. Just keep paying and take your lumps. And don't do the same thing again.