I am upside down on a car loan (owe $16K, the car is worth around $11K), will the bank holding the car loan negotiate with me the principal owed (reduce it) if I sell the car and want to pay them off even if I have to take money out of my pocket to make up the difference.
2006-12-19 23:44:22 · 9 answers · asked by Juan G 2 in Business & Finance ➔ Personal Finance
The answer is going to depend on which bank holds your lein, and how long you have had the loan. Many banks will adjust the amount due if you have done business with them for some time, but you would have had to been paying on the loan for one year or more.
The only thing you can do to actually get the answer is to first ask for the buy out price of your loan, and then pose your query to the bank. You may be able to negotiate a little or you may be pleasantly surprised. If you have nothing to lose by trying, and agreat deal to gain, by all means try.
2006-12-19 23:55:19 · answer #1 · answered by on1y0ne_y2k 2 · 1⤊ 0⤋
1
2016-09-27 19:00:56 · answer #2 · answered by ? 3 · 0⤊ 0⤋
Negative equity
The value of a new car drops dramatically as soon as you drive it off the lot. That's because it then becomes a used car. It doesn't matter that you only used it for five minutes - it's still used and is worth much less because of that fact.
This depreciation is an important concept to understand when dealing with financing because while the value of your car drops immediately, your loan principal drops more gradually. So if you try to sell the car too soon, you may end up owing more on it than you can sell it for. That's called negative equity.
You can avoid getting into negative equity situations by following these simple rules:
Keep your car until it is paid off completely. Obviously, no matter how much your car depreciates, you won't have negative equity if you don't owe anything.
Don't buy a car that is too expensive. If you struggle too much to make the payments, you may decide to sell the car earlier than is financially prudent.
Don't drag out your payments. You might get a slightly better interest rate and your monthly payment will be smaller. But it will staple you to that car for the financing term. Five years later you'll still be paying for a car that may no longer fit your needs.
Make the biggest down payment you can. This will help offset the effect of depreciation and start giving you some positive equity.
If you are trading in, in some cases you'll have to add the negative equity to the price of the new car. But that is just recipe for getting into the same "negative equity" situation again.
2006-12-19 23:56:07 · answer #3 · answered by Anonymous · 1⤊ 0⤋
I would recommend talking to customer service and explaining to them that you are absolutely going to default absent an intervention on their part. You will ultimately need to speak with a supervisor, as the average rep doesn't have the authority to make these kinds of decisions. It may take time, but they would rather settle for something (usually 50-75%), then risk losing the whole thing. Thisis done with mortgage defaults all the time. The downside is that any negotiation will still have a negative impact on your credit rating.
The second possibility, which I highly recommend, is to take out a personal loan to make up the difference and pay the car off completely. Prosper is a good resource for this type of funding. Try this link http://www.ProsperFiveStar.com - it's a link to a funding group on Prosper. You can join (free) and create a loan listing in a few minutes. If your loan is funded then you'll get the money in 2-4 days. No credit checks and all credit types are accepted. Good luck!
2006-12-20 01:50:54 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Generally, no. The bank or noteholder has no incentive to enter into that sort of negotiation.
Start adding an additional $25-50 a month to the payment that you make and you'll get out of the "hole" more quickly.
2006-12-19 23:54:31 · answer #5 · answered by dem4six 2 · 0⤊ 0⤋
Don't know, like last poster said you will need to talk to your bank.
See www.clarkhoward.com. That website has a lot of good financial information.
2006-12-19 23:55:14 · answer #6 · answered by keyz 4 · 1⤊ 0⤋
Compare rates free
2015-01-31 10:51:02 · answer #7 · answered by ? 1 · 0⤊ 0⤋
my car is the same and they told e that i would have to first pay them off before i can sell the car unless i p ex it in for another one. mad i know cos youd never get that sort of money together or you wouldnt hsve got finance in the first place. watch they dont charge you if you do repay early.
2006-12-20 00:34:52 · answer #8 · answered by togs 3 · 1⤊ 0⤋
You don't know until you ask the bank. Inquire of them, and get their answer and proceed from there.
2006-12-19 23:53:30 · answer #9 · answered by Beau R 7 · 1⤊ 0⤋
I recommend you to check this site that can solve your doubts FINANCE-SOLUTIONS.INFO
2014-05-15 13:40:09 · answer #10 · answered by Anonymous · 0⤊ 0⤋