Question

I don’t know if this is okay to post in here. I’m a beginner when it comes to finances and budgeting. I’ve made numerous dumb mistakes and I’m no where near even figuring it out. I need support/guidance/opinions about my vehicle. I have a 2015 Ford Explorer. It was $32, 000 when I purchased it in 2018. I currently owe $24, 000 still on it. I pay 15. 9% interest because my credit is horrendous. My monthly payments are $594 a month and it kills me. I believe I am on a 64 month contract or something close. I bank through Ally Financial and there is no refinance option, plus my credit is probably worse than when I purchased because I was late on a few payments. The only thing I can do through Ally is lengthen my contract and stretch my payments. I have about $8000 (outside of the car) in other debt that needs to be paid that I haven’t been paying down on. I lost my job in March and now stay home with my girls while my husband works. I have yet to receive unemployment for my job loss. Here’s my dilemma. I want to get out of paying for this car and get something different but I don’t know how. My family has suggested letting the bank take the car and just getting a new one and they’ve also suggested filing for bankruptcy. I don’t understand how I’d be able to get a cheaper car or anything at all because I don’t have any money saved to purchase a car. So if the bank takes mine, how to I get another one? I also don’t understand how bankruptcies work and how that would benefit me. Does anyone know how to point me in the right direction or can anyone give me ideas on what I can do?  

Answer 1

Can you get a job that pays just enough for your car payment and is opposite your husbands work schedule so someone is home with the kids?  

Comments

@unknow second this

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@unknow yes, we are looking into this now. He is as well. I am currently doing instacart on the weekends but that is proving to not be worth it the way I thought.  

Answer 2

Is your husband on the loan with you?  

Answer 3

Keep in mind, you will still owe the difference on the Explorer even if you voluntarily have it repossessed. Then you’ll have to still pay the portion of which it has depreciated. Fords depreciate significantly.  

Answer 4

Don’t let bank take the vehicle! Repossession puts you in a worse position. See Dave Ramsey regarding repossessed cars. Check the current value on Kelly blue book or true car dot com. Sell it and try to get a small loan for the difference if possible. Purchase a used car once you get another job or if you get more stimulus money set it aside for a car.  

Comments

@juanjuana if her credit is as bad as she's thinking, she wouldn't be able to get a loan, especially being unemployed :(

Answer 5

Don’t file bankruptcy unless you absolutely have to do it.  

Answer 6

So since your credit is worse than when you got it, you’re gonna have an even higher interest rate on a new car and worse credit cause now you’ll have a repo. You probably won’t even qualify. And you’re unemployed. Your husband would probably have to get the car in his name alone. When you repo a car the bank sells it at auction. You own $24k and they can literally sell it for $1 and now you owe $23999 PLUS the towing and all the other repo fees. Now it’s in collections and on your credit. Then if you don’t pay it they will take you to court and garnish your wages or tax return PLUS now you’ll have the court fees and interest. Bankruptcy is on your credit for 7 years and you’re literally starting over. You don’t have that much debt I wouldn’t recommend it but of course I don’t know your financial situation. If you guys can pull through I would really just work on your budget and try to get the car paid off and not get another one.  

Comments

@finicky2385 bankruptcies are on your credit for 10 years. I know from experience.  

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@eldon oops sorry by bad on that one thought it was 7!  

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@finicky2385 nope. It’s 10. It’s horrible.  

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@finicky2385 Bankruptcies and public records are 10. Consumer debt is 7.  

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Not necessarily true. May depend on which type bankruptcy. Ours fell off at 7 years, we filed Chapter 13.  

Answer 7

You don’t want a repossession on your credit report. You will still owe the company who financed you because they car won’t sale for what you owe. You can try and trade it in but they will likely want to finance you for more. (Been there done that). In California you have to have a certain amount of debt before you can file bankruptcy. You may be able to do a chapter 13 but they will take in account all that you have including a home if you have it. Pray about it. Talk it over with your husband and see what works best for you and your family.  

Answer 8

I don't know what to add on top of what everyone else has said except you're taking a very important step seeking help. If you want to understand bankruptcy, you may be able to call a lawyer and talk options with them.  

Comments

I would say this though. If you can avoid bankruptcy, either a 7 or 13, i would. Good luck hun.  

Answer 9

Contact your lender and ask about deferment due to coronavirus. This means allowing you to skip payments and have them added to the end of the loan. If not, they may offer forbearance, giving you more time to pay.  

Answer 10

I’ve done collections and something I used to recommend is you could see how much Carmax would give you for the car and see if the lender will work with you on the difference. Definitely don’t let it get repossessed, the fees are really expensive and it won’t sell for what you owe and they’ll just sue you on the difference

Answer 11

Maybe you could get a night hours job and earn enough to cover the car payment? No childcare costs if your husband is home.  

Comments

@ilene29 I would be awake all day with my children (youngest is 8 months) and then get a night shift job, so I don’t think that would work. My husband leaves at 6:30am and gets home at 4:30pm. I could try and find something part time from like 5pm-10/11pm though. I’ve been looking.  

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@grainfield6 I know it would be tough but at least it would buy you some time to research. Don’t dismiss retail jobs (clothing) if you have stores in the area. They’re usually high paying for part time.  

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@ilene29 I feel like that strain on my body of literally not sleeping would be more than tough lol. Especially because I’m breastfeeding and I would hate to lose that source due to working full time overnight and then being awake during the day. A retail job would be fine but it would have to be an evening retail job that is open late enough where I could start at 5pm and be done by 11pm and I don’t know many stores at this time that are open this late. I was going to check out grocery stores though that need shelf stocks or something that I could do in the evening for a few hours. My husband normally has two jobs and so he’s trying to look for work as well. Honestly though at this time it would be to cover our current bills since covid took my job we don’t even make enough at the moment to cover what’s due. I also do instacart on the weekends but that’s not proving to help as much as I thought.  

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Many larger grocery chains are hiring in masses right now and are open later into the evening. Even just for cashiering. Stocking is always an option too, but I personally find that more strenuous.  

Answer 12

You don't want a voluntary or involuntary repos both hurt your credit. One is not better than the other. Plus you'll eventually be sued for the balance after the sell it. If you give up the car you're gonna have issues getting another car loan. Bankruptcy stays on your credit for 10 years. It'll be a few years before you'd get another loan.  

Answer 13

What about refinancing?  

Answer 14

Many car dealerships are hurting right now and offering 0% and a couple months waived payment. I would look around and see what you can do. I know leasing a car is not ideal. But, you can try leasing a car and rolling over that payment. You will pay now but in 3 years it can be a fresh start for you. Otherwise, I would try to sale the car on marketplace. You have options that are far better than repo.  

Comments

@deina65 so get another car? Or selling my car, using that as a downpayment and then rolling my current payments over to whatever new loan I’d get?  

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I think it depends what situation you’re in. If you can survive on 1 car and save money and pay off the loan I think that’s ideal. But, if that’s not an oortion; I would sale your car. You will get way more selling it privately than a dealership. I would sale it and put a huge down payment on a car that gets you from A to B. A real cheap but reliable car.  

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The dealership will probably make you lease and roll over all negative equity. They made me still have a down payment on my lease. I would look into ford or Honda. I had better luck with their 0% interest offers. They basically took all my negative equity bc of the “deals” they had going on. Just remember that the car will get you where you need to go. It may not be what you want but in time you can save and get whatever you want

Answer 15

Have you tried asking for deferment due to COVID? That might help temporarily. Like others said, don't let it get repossessed. The only other option is does your husband have better credit? Can you try to trade in your car, roll over the negative equity and get a used car for $5-7, 000. You'd have negative equity you'd be paying for the car but you could most likely lower your payment into something more reasonable. Then you can get yourself into a better financial situation.  

Comments

Or Brittany above said sell it on the marketplace IF you can get a personal loan to make up the difference from what you owe vs sell it for. You'd get more money, but it might be hard to sell it if you'd still have a bank loan on it that the sale wouldn't pay off. Carmax also usually offers the most on your car.  

Answer 16

Can you just sell it and take a 3-4K loss, go without a car while your unemployed as you pay off the remainder balance? Don’t roll over the negative equity. just get rid of it.  

Comments

@supercilious833 I only have one car and my husband uses it to work full time

Answer 17

Would you consider to work through your phone to earn money

Comments

@duer yes but I’m already a part of a company

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@grainfield6 sorry I didn’t know

Answer 18

Have you tried “selling” the car to your husband. I had a friend who did this. She had him take over the loan because he had better credit and it lowered the interest rate. I rolled over negative equity and regret it 100%. I will never do That again. I also don’t know if you can sell it and take a personal loan to pay the balance because they won’t release the title until the loan is paid and I don’t know many people who would buy a car and wait for the title to be released.  

Answer 19

My daughter was told even if she turned the car in for repossession she would owe the balance plus then not have a car. She managed to scrimp by and pay down enough that her credit was better and she refinanced from 21% to 6%. Start pinching pennies and make extra payments as quickly as possible, there is hope!  

Comments

@snub28 I just refinanced my car too - payments went from 570 to 321

Answer 20

From listening to Dave Ramsey the best thing that you can do is sell the car, pay off the difference. I am so sorry, I can only imagine what a painful lesson this will be but you will get through it and the better for it! Hang in there.  

Answer 21

Check out Ari from Boston automotive consultant on YouTube. He has some good advice and he offers some help too

Answer 22

Look everyone can frown upon it but sometimes you have to stick your head out of the water somehow. You have to do what is best for your family’s patrimony; my husband and i got to the point where our only option to make ends meat was to file for bankruptcy. We had to let go of an SUV because we were naive and young and purchased a car we couldn’t really afford. It was upside down and we didn’t have any savings (not big enough to cover the negative equity at least) si we couldn’t sell it to CarMax or any other dealer. Eventually we were faced with paying groceries for the month of making the car payment plus adding gas. So we let it go. We then filed for bankruptcy because long story short my husband prior to getting married was a financial mess with credit cards & personal loans to the point where I couldn’t help him even with my income. We’ve started from ground zero and trust me filing for bankruptcy is no fun you feel like a failure but sometimes that’s the only option to start from ground zero. We vowed we wouldn’t allow ourselves to get to that point ever again and we haven’t. We don’t own any credit cards (well just 1 for emergency but it has a zero balance). We pay everything cash and learned to budget. We are slowly building our credit back up. We did keep our homes ( we have 2-primary & a rental) so that’s given us some credit worthiness. And we purchased a vehicle with somewhat of a higher interest rate but my monthly payments are comfortable and reasonable so I’m not too picky on the interest ( that’s the price for filing bankruptcy)! Don’t get me wrong I’m not encouraging you to file for bankruptcy but I read all these posts that make it seem like it’s the worse thing you can do; financially it might be but for my family’s sake in order to put food in our table and keep our homes this was the best option for us. Yes we are above ground zero but even ground zero is a start!  

Comments

@grainfield6 oh and to clarify if you let go of a car & then file for bankruptcy the bankruptcy takes care of any negative equity. Meaning the finance company can’t hold you liable for any balance. If you let go of a car after filing for bankruptcy then they can hold you liable.  

Answer 23

Ally offers forbearance and will tack the payments at the end of the loan. You can also lower your payments by rewriting the contract and once you’re financially able to you can start paying more or refinance.  

Answer 24

If it were me I would grit my teeth and stick it out. Make payments on time no matter what. When I got into a better position I would change banks for sure. A credit union usually favors the client and works with them more easily. Is Ally an online bank? Not my thing. I hope your unemployment comes in soon! And that we ALL can get back to work sooner than later!  

Answer 25

What is the car worth if you sold it? Do you owe more than you would get ?  

Answer 26

Try driving Uber eats or GrubHub. with Covid-19, I’m doing pretty well with Uber Eats (better than my friend who is doing Instacart). It’s flexible and depending on the ages of your kids. they can ride along.