friends problem (Car Payments)

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  #1  
Old 07-27-06, 04:07 PM
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friends problem (Car Payments)

i figured this may be the best place to post this, my buddy
bought a new car about three months ago and now realises
that he will pay to much for it and that the payments are way more than he can afford, he has also ran out of people to borrow
$$$$ from(including me. having never in my lfe facing this situation, i would like to give him some good advice as what he needs to do. he doesn't drink or smoke his check away or anything like that, heck he can't afford to go fishing anymore.
i suggested that he give the car back and get a buy here pay here type of deal. i don't know, what do you guys think?
(come to think of it this is the first time i ever asked a question in this forum).

barry
 
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  #2  
Old 07-27-06, 04:14 PM
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Well..that sucks.

Did he get it through a dealership? B/C you know, once it's off the lot...it's not worth what you paid for it. Your bud might be better off trying to sell it...but he might still lose out. If your bud has the money to lose out on it, then I would say go for it b/c I don't think there's another choice.

There are definitely other ways to go about the situation but if you help him out too much, you'll be his enabler and he won't learn.

In any case, don't take the fall for it or help out $$$-wise b/c he will know who to fall on the next time.

BTW: What's a buy here pay here type of deal?
 
  #3  
Old 07-27-06, 04:34 PM
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Originally Posted by DIYaddict
BTW: What's a buy here pay here type of deal?
Small, used car lots that provide on-premises financing. There are many honest places like that, but IMHO the majority are rip-offs charging exorbitant interest rates for low-quality cars. I would avoid them like the plague.

Bottom line, your buddy's going to take a beating any way you look at it. He's likely to be on the hook by anywhere from $1000-5000 (I'm just guessing) regardless of whether he surrenders the car or not. Would be interesting to hear how he qualified for a loan on a car he clearly is not able to pay on. His credit rating is likely to go down the toilet EXCEPT at a buy here-pay here where they'll be GLAD to finance him at about 22% interest.

Sorry if this is a little blunt.
 
  #4  
Old 07-27-06, 05:16 PM
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he got the car from a dealership, his credit wasn't the best, he told them what he could pay a month, then he took the ride around the block and of course fell in love with the car, with that the vultures jacked up the payment 200.00 more than he really could afford. the sad news is he traded in a van that was still in dang good shape, i just believe he got hooked and all they had to do is reel him in. btw there are several guys out here that have a bhph lots that don't add interest to the payments but the prices of the cars are above blue book value. i was also wondering would it be more benificial for him to take the car and say here are the keys to the dealership, or let them come and repo the dang thang?
thank you towguy and diyaddict for the quick responses.

barry
 
  #5  
Old 07-27-06, 08:00 PM
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Repo will just make his credit worse. I don't know if you should suggest that but I guess that's a way to do it too. But then how will he get another car? Maybe he could hitch rides for a while, take the bus, ride a bike...save some money and buy a used car?
 
  #6  
Old 07-27-06, 09:04 PM
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Edited out entire post as it did not help the original poster. Was antagonistic at best.
 

Last edited by majakdragon; 07-29-06 at 07:36 AM.
  #7  
Old 07-28-06, 04:13 AM
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Second that.

Repo not a good idea. Just turning in the keys not much better. What will happen is the dealer will resell the car and he will owe the difference between what he owes and what they get for it. If he owes $20k and they resell it for $15k, he's on the hook for $5k; they really won't have much motivation to resell for a high price to minimize the difference. I'll take a guess here that he financed it on a long term, right? Like 60 or 72 months? That'll mean likely being upside down on the loan even if he wrecked it and insurance paid it off.
 
  #8  
Old 07-28-06, 08:16 PM
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to repo, or not to repo

the info given has been passed on to friend, except the uncalled bash by Former Member. maybe this guy does'nt understand that this is a help type forum, and not a smart butt forum with no really useful
info. i guess Former Member was born into a family that every thing handed to him/her, and has really never had to work hard to get what we have , which are mere peanuts.

barry
 

Last edited by Forums; 08-11-06 at 12:33 PM.
  #9  
Old 07-29-06, 08:04 AM
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To my understanding, a voluntary repo, or a non voluntary rep, shows the same on your credit.
 
  #10  
Old 07-30-06, 07:05 PM
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i went ahead and paid the car payment for him this month $600.00 or so. ( what are friends for, even dumb ones). he has a 60 mo. loan, the pay off is 20,000 or so. he got hit by the the irs for back taxes that he didn't know existed from 2002, so they started garnishing his paycheck, it was from a 401-k from a job he had years ago that he has not seen a dime of it but they taxed him any way.so thats what brought him down (i basically demanded
this info before i would help out). and it's been hard for him to get back up to speed. i went to the state's web site that holds unclaimed cash, and sure enough, his name and a old address was there, so now he is going through his files to find somthing to prove that he lived at that old address to claim his money.
sorry this went a bit off topic, but i wanted you all to know that he isn't a complete loser ( common sense needs some help though).

barry
 
  #11  
Old 07-31-06, 05:17 AM
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I would hate to guess what kind of vehicle; 60 months @ $600 is a big piece of change.

Nothing wrong with helping friends as long as you go into it expecting to never see the money again.
 
  #12  
Old 07-31-06, 06:10 AM
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IMO the guy needs to sell the car and cut his losses. It's better to lose a couple of grand and learn a valuable lesson than to struggle trying to make car payments over the next 5 years.
 
  #13  
Old 07-31-06, 09:35 AM
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Originally Posted by brentwoodpmg
i went to the state's web site that holds unclaimed cash, and sure enough, his name and a old address was there, so now he is going through his files to find somthing to prove that he lived at that old address to claim his money.
sorry this went a bit off topic, but i wanted you all to know that he isn't a complete loser ( common sense needs some help though).

barry
Hope he gets $$$! That would help and get him somewhat back on his feet. A lot of people make mistakes! If they don't get back on their feet and don't even try to do something about a situation and gives up and doesn't care...then, that's a loser.
 
  #14  
Old 07-31-06, 07:48 PM
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i have never gave a dime with the expectation of getting it back,
it's sort of like the saying "don't gamble with more than you can afford to lose". i think, that when he gets back on his feet he will take care of the debt, which to me is only a memory now, but i feel that i have maybe only gave him a months repreive
barry
 
  #15  
Old 07-31-06, 09:39 PM
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Can you declare a loss on the sale of a vehicle...

...and get a break on income tax? Don't know about that one. It may be a little something to take the sting out of a bad situation.

(Sound of me standing up on soap box- editorial starts now, beware!)
Your friend should sell the vehicle, take the loss, and do his homework before he buys another car. Doing the right thing almost always means doing the tough thing.

There are plenty of loan calculators available for free on the web- if you have a computer with Microsoft Excel on it, you can use the PMT function to figure the payments out yourself. Also, direct him to "how to negotiate a car sale" websites: he should not fall for that "what can you pay" routine. Doing the homework up front will save bux.

OK, down from the soapbox. I always get change back whenever I give my two cents.
 
  #16  
Old 07-31-06, 09:44 PM
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All the ideas about "sell the car and cut his losses" sound great, but think about the logistics of that -- don't most buyers want the title when they buy a car? He's obviously going to take a bath on the sale, certainly he's way upside down by now. Obviously he can't come up with the cash to cover the spread. Is the bank going to just hand over the title and trust him to come up with the rest? I think not.

OP, sounds like your friend may have lucked out so hopefully it's a lesson learned.
 
  #17  
Old 07-31-06, 10:05 PM
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Good point

You're right, that almost certainly means selling it back to the dealership or the bank that holds the loan, and what, arranging a personal loan to cover the difference? Yikes. Hopefully the "found money" will help.
 
  #18  
Old 08-01-06, 08:12 AM
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There is no way the bank will hand over the title and "trust" him for the remaining difference if he sells outright. That is financial suicide on the bank's behalf.

However, I do agree that the best solution to this problem is to sell the vehicle and obtain as much money as possible. Hopefully the difference between what he owes and what he can sell at won't be much, but he will need to find a way to make up the difference. Perhaps he has other items (ATV's, boat, big screen TV, etc) he can sell to help him come up with the difference.

Or perhaps he needs to take on a 2nd job and save the extra money needed. He could donate plasma (I know, it's not a pleasant thought but it sounds like he's hard up for cash).

Basically whatever he does to sell the vehicle and pay the difference is better than struggling for 5 additional years, or even worse turning the vehicle back in so he can damage his credit (even further) and still be responsible for the difference in sell price vs. loan amount.

It's a sucky situation, but unfortunately he's there and just needs to crawl his way out as quickly as possible. After he is out, I'd advise him to buy a good USED vehicle. Preferably he could pay cash for something, but if not definitely keep the payments lower than $600/mo. I've financed alot of vehicles and the highest I've ever paid is $420/mo. That payment is just scary!

As far as advice, have him read a book called "Total Money Makeover" by Dave Ramsey. It's very inspiring and if he applies it to his life will help him avoid this situation or similar ones in the future.
 
  #19  
Old 08-01-06, 08:28 AM
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Get on to gettin on.

Well, the most straight forward way to fix this problem is the get another job and pay down what is owed on the car. Once below blue book, he can trade in and find something more affordable. Sounds like he has money troubles of some sort. Best advice is to have him either make some money some how or get another job. Don't lend him any more money. Life has a way of fixing these little problems. But I can tell you if you keep helping him along you are actually hurting him and you in the end. Best advise is to let him know how many years of regret he will go through if he lets it get repo'd or he messes up his credit. I can't tell you how many people will toss away a moment on a bad decision they will end up living with for 10 years and the system is against you anyway too. So why start in a hole. Tell em good luck.
 
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