We need to get rid of our expensive truck!

[LilMamiBella]

If we paid it off right now we'd owe something like 27,000 which is exactly what its worth. We pay close to $700 a month and we'd pay it off in like 5 years with interest. We were thinking of turning it in but I heard that it would be sold at auction and then we'd still have to pay the difference. Is that true? I know our credit would be terrible but at this point we're thinking of doing the Dave Ramsey play anyway. We tried to sell it last year with no luck and I doubt anyone would want to buy it now either. Are we just out of luck?

[velochic]

Is there a reason you are no longer able to make payments? At this point in time, I don't think anyone is going to give you enough to pay it off... unless there is a reason you can't make payment, you may just have to plug along and pay it off.

[LilMamiBella]

Originally Posted by velochic

Is there a reason you are no longer able to make payments? At this point in time, I don't think anyone is going to give you enough to pay it off... unless there is a reason you can't make payment, you may just have to plug along and pay it off.

Well we can pay it but its getting really tight for us lately. We have cc debt too that we're trying to pay off too. Plus this is 5 more years of payments. We don't even have savings.

[sbrinton]

If I were you, I would calculate how much interest you will be paying over the rest of the loan. You should also try to to calculate how much the truck will be worth at the end of the loan. And how much the truck will cost between now and then (gas, insurance, maitenance).

For example, if you have a loan for $30,000 at 10% interest over 5 years, you will pay a total of $8,245 in interest. So when you pay off your truck after 5 years, you have paid a total of $38,245. This calculator may be helpful (look at the amortization table to figure out how much interest you will pay).

Then calculate the cost of gas based on your fuel economy, gas prices, and how many miles you drive. For example, if you get 12 miles per gallon, gas costs $3.80 and you drive 500 miles a month, you will pay $9500 in fuel. Add to this number how much you will pay in insurance, maitenance and repairs. You might find this calculator to be helpful.

Then figure out how much the car would be worth at the end of the loan.

This should help you determine your "total cost of ownership". If this is a vehicle you don't need or want to drive, you probably will loose more money in the long run by keeping it then you would by selling it and downsizing to something more practical in the short term.

For example, the truck might cost you more than $50,000 over the next 5 years and on the other side, be worth only $12,000. Compare this to loosing a few thousand dollars now and buying a more fuel efficient car?

Does this make sense? PM me if you need more help with the math.

-Sara

[LilMamiBella]

So if we turn it in and they auction it and get like 10,000 and we owe like 28,000. So then they'd tell us we need to pay the 18,000. How long do they give you to pay something like that? Do they take you to court? What if you don't pay it? of course my credit will completely suck..

[velochic]

Yes, yes and yes. I'm guessing that you are stuck with that vehicle (or at least the cost of it).

[llamalluv]

If you do a voluntary repo, you will still owe the money and you will have no truck. As long as you can keep making the minimum payment, do that. If you can afford more than the minimums, and feel pretty secure in your job(s) pay more. If you can pay more than the minimums, but you feel uncertain about your job situation, pay the minimum and stick the extra into a savings account for an emergency fund.

And don't fall for the "our truck is worth what we owe." Your truck is worth what others are willing to pay for it. If no one will buy it at $28,000, it's not worth $28,000, no matter what KBB.com says.

[sbrinton]

Is it possible to sell the truck?

[LilMamiBella]

Originally Posted by sbrinton

Is it possible to sell the truck?

We listed it in auto trader last year and no bites. Dh and I talked last night and he thinks that if we focus on paying off credit cards then we'll be just fine with the truck. He doesn't like the idea that if you take it in you'll still pay something later..he said he might as well keep it.

[heather_c]

Do you have a CarMax near you? If so, they will give you a free buy quote on your car, and you do not need to trade it in for another vehicle. The offer will not be as much as what you could receive in a private party sale, but it is worth checking out. Good luck with your decision making.

[dachshund mom]

You mention doing the Dave Ramsey plan. He would tell you to sell it on the street and go to the bank to get a loan for the difference. So if you owe $27,000 and can sell it for $20,000, try to get a $7,000 bank loan with a smaller monthly payment.

[BetsyS]

Originally Posted by dachshund mom

You mention doing the Dave Ramsey plan. He would tell you to sell it on the street and go to the bank to get a loan for the difference. So if you owe $27,000 and can sell it for $20,000, try to get a $7,000 bank loan with a smaller monthly payment.

I'm a lukewarm fan of Dave, and this is what he would say.

The problem is....where do you get these unsecured loans for whatever amount? We thought about selling our house last year. We owe more than it's worth, so we went to the bank to talk about our options if/when it sold. There are no options. We were looking at having to take a cash advance on credit cards. The bank told us that they just don't loan money out without collateral. Now, I'm not sure if that is 100% true, but it was for us.

[dachshund mom]

Originally Posted by BetsyS

I'm a lukewarm fan of Dave, and this is what he would say.

The problem is....where do you get these unsecured loans for whatever amount? We thought about selling our house last year. We owe more than it's worth, so we went to the bank to talk about our options if/when it sold. There are no options. We were looking at having to take a cash advance on credit cards. The bank told us that they just don't loan money out without collateral. Now, I'm not sure if that is 100% true, but it was for us.

I'm die hard Dave Ramsey since we got debt free on his plan and are now :::. But we never had to do a bank loan and I don't know much about it. Seems like with being upside down on a house, you'd do the short sale and let the bank come after you for the difference, essentially forcing the bank to give you the loan. Isn't it their screw up if they let you get upside down on a house since they are responsible for approving the apprasial? I've stopped listening to the radio show and I'm not up on current advice with the banks being stingy lately and everything.

He used to say credit unions are the place to go for loans because they'll look at your whole situation. But things are so bad right now, I see your point. She's managing to pull off $700 a month now, so an 11 month-ish loan at $700 a month and it's paid (if she's $7000 in the hole - that was a high end estimate).

[lucyem]

Originally Posted by LilMamiBella

We listed it in auto trader last year and no bites. Dh and I talked last night and he thinks that if we focus on paying off credit cards then we'll be just fine with the truck. He doesn't like the idea that if you take it in you'll still pay something later..he said he might as well keep it.

It depends on how much you will owe later. Someone else discussed this before. But if you do the math and find out you will pay more in gas keeping the truck then you would owe getting rid of it for less, get rid of it. Don't forget insurance costs can be less with a car. Now is the time to sell a truck if you can, at least around here. Snow is on its way.

[BetsyS]

Originally Posted by dachshund mom

I'm die hard Dave Ramsey since we got debt free on his plan and are now :::. But we never had to do a bank loan and I don't know much about it. Seems like with being upside down on a house, you'd do the short sale and let the bank come after you for the difference, essentially forcing the bank to give you the loan. Isn't it their screw up if they let you get upside down on a house since they are responsible for approving the apprasial? I've stopped listening to the radio show and I'm not up on current advice with the banks being stingy lately and everything.

I do like Dave, and I think his baby steps work. I just think he's a bit rose-colored about some things. He goes on and on about short sells, but in our experience, they are incredibly hard to get approved. He also goes on and on about "getting a loan" to cover the difference. Again, not so easy to just pop in the bank and tell them you want a loan.

In our situation, the housing market just tanked around us. A house down the street is sitting (on the market 6+ months) at $55,000 less than we paid 3 years ago. So, that's current market value. We obviously bought at the peak.

Our bank wouldn't let us do a short sell, because you have to have a really bad sob story to qualify. My dh just got transferred--that wasn't good enough. You also have to be 3 months in arrears on your mortgage to begin the paperwork for a short sell.

Our only options were to somehow come up with the money to cover the loss (we don't have savings to cover it) or let the house foreclose. Those options didn't work for us, so we took the other option--which is to stay in the house and forget about selling. Dh turned down the transfer and luckily the company found a job in town for him.

[llamalluv]

Originally Posted by BetsyS

I do like Dave, and I think his baby steps work. I just think he's a bit rose-colored about some things. He goes on and on about short sells, but in our experience, they are incredibly hard to get approved. He also goes on and on about "getting a loan" to cover the difference. Again, not so easy to just pop in the bank and tell them you want a loan.

In our situation, the housing market just tanked around us. A house down the street is sitting (on the market 6+ months) at $55,000 less than we paid 3 years ago. So, that's current market value. We obviously bought at the peak.

Our bank wouldn't let us do a short sell, because you have to have a really bad sob story to qualify. My dh just got transferred--that wasn't good enough. You also have to be 3 months in arrears on your mortgage to begin the paperwork for a short sell.

Our only options were to somehow come up with the money to cover the loss (we don't have savings to cover it) or let the house foreclose. Those options didn't work for us, so we took the other option--which is to stay in the house and forget about selling. Dh turned down the transfer and luckily the company found a job in town for him.

We used Carmax and a $3500 cash advance from a credit card to get rid of DH's truck and it's $355/month payment (and the $100/month in insurance premium) We paid off the advance within 3 months.

DH has been without a truck for 8 months. We just bought him a new to us truck for $3500 - 1989 S-10 with 60,000 miles (no, that is not a typo). Fresh paint, pristine interior, hard and soft bed cover, and only a touch of rust on the undercarriage.

[FondestBianca]

if you "turn it in" or trade it to a dealership I imagine you'll come up still oweing about 7 to 10 grand (maybe more) because they'll give you nothing for it on trade... also if you surrender it back it may reflect negitivly on your credit. If you surrender it they will probably want the difference of trade in value and remainder on your loan on the spot. The bank will not continue to carry a loan without a pink slip in their name. The bank owns it, the dealership you bought it from doesn't. If you did in-house financing then you may be able to go back to the dealership and work something out but, you're still gonna come up short and they are going to want the money. If they don't screw you a bit you screw them... and well, thats just bad business sense for them yk. If they can only sell your truck to someone else for 25,000 (probably difficult right now... no one wants trucks it seems) it would make no sense for them to give you anything more than 20,000... because it would cut into their profit.

If you went that route and had to pay up $7000+ due at the time of the surrender you're onyl options would be putting right back on a credit card (an unsecured debt credit card... you're typical Visa, mastercard, american express, etc..), sell a bunch of stuff you own and come up with the cash, borrow money from someone you know (not a good idea in my book) OR they will send a collections agency after you who will hound you, harrass you, dock your paychecks (which is very legal btw), and start to bother anyone you listed as a contact on your loan. Eventually if the collection agency can't get a dime from you the bank will take you to court in which case they will win and you will have a court order to pay. It's wouldn't be pretty. I've never been there but, I know people who have. It destroys your credit completely for about 5-7 years or more if you don't get right back on track credit wise after it's all done. You need to keep your credit rating intact and healthy for the future when you may need to apply for other credit such as credit card for emergency, home loan, auto loan, apartment, short term loans through stores, etc...

If you trade you could possibly work the leftover cost on your loan into a new loan on a cheaper car BUT that would mean you'd have to get an awesome deal on the new car you purchase. Why? Because the bank will only loan what they think the car is worth. If you have 7 grand left from your truck and buy a car at 7 grand that is worth 7 grand they won't loan you 14 to buy it... see what I'm saying? The bank has to know that if you can't pay they can repo and recover as close to the reminder of the uppaid loan as possible. SO... I'd suggest selling it privatly through craigslist or wheeldeals. Start with what it's worth and work your way lower as you need to depending on the interest you see people showing. You're probably not going to get what its worth because honestly, trucks aren't worth what they're really worth right now... if that makes sense. Make sure your buyer has bank or credit union financing ready to go. Let them know that you need to have the cash or approved loan up front so you can pay your loan... because that is the only way you can transfer ownership to the bank they have financing through. You can't sell it until your bank is paid in full.

4 years ago I bought my car through a private owner who had a loan on it. I went into a credit union (better interest rates and approvals) got approved for a loan for the car and the kid selling the car was nice enough to wait a week until all the paper work was done. My credit union wired the money to his bank, we all signed papers, and it was done.

craigslist is your best bet. If you think you're going to have a hard time making payments or want out of a car sooner than later you might as well lease in the future. It's about the only way to come close to what you still owe when you "trade it back" to the dealership. But, like most people including myself keeping a car for the long haul or wanting the ability to customize it means you have to own as opposed to leaseing. Lots of people say leaseing is a bad deal but really, it works better for some (not for me and many others but definatly for some) ... you might want to look into that in the future.