QuestionGood evening,
I got a new car early in the year and I thought I would be able to afford it at the time. Unfortunatly things changed and now I am struggling to afford this car. While im not exactly desparate yet I have been wondering if there are options.
I've tried to get a refinance after about 6mo ownership but declined. (Dealer suggested) I know I have bad credit that I am working on and the payments that I am making are helping but other bills might start to slip.
What options are there? I've toyed with the idea of trading in it as near new and go used just to get a lower payment, but it just seems like a crazy idea to me and. Possible unheard of, but I gotta lower that bill...
Answer
me
Hi Scott
sorry to hear you are having problems. Here are some additional bits of information I would need to address your specific situation but rest assured you are not the only one currently facing this same situation. This information can be supplied in a follow-up question which I would be glad to address as well ...The information I would need is as follows:
1. The year, make, model, trim level, miles, and any additional options i.e. wheels and tires, navigation, sunroof, that would add value to your vehicle... of your vehicle?
2. The approximate amount of your pay off?
3. Your current interest rates, term of your loan, and amount of your monthly payments?.
4. The name of the bank the loan is through (currently)?
5. Whether or not you purchased any cancelable's when you purchased the vehicle. I.e. extended service contracts, maintenance programs, or anything else that added to the amount financed in your contract...?.
6. How much sales tax did you pay?.
First off, when you bought the car the dealer told you if you make the payments on time you would be able to refinance to a lower rate after six months? Right? This is a close that is designed to help you rationalize paying a higher rate than you probably thought you should and nothing more. So forget about the six months.
If you bought any cancelable's you should immediately exercise your option to cancel them. For instance if you are financing an additional $1995 for an extended service contract you should cancel that immediately. The money will be paid directly to your bank and will reduce your payoff balance. Some banks will re-index your payments for you (lower them) others will not.
If you are serious about getting out from under the payment and the vehicle then you should look for a large franchise dealer with a strong subprime department and depending upon which state you are in I would suggest a Larry Miller franchise if possible because they own their own bank... they buy deep... the rates aren't as abusive... and they will advance a higher percentage of book value or invoice on your next purchase.... this is important. Franchise dealers will also have the most clout with the financing sources as well as 10 times as many options (at least ) as an independent dealer all of this is important and here's why:
I am guessing that you have negative equity in this vehicle possibly even a substantial amount. So in order to refinance you will need to either (a) find a used vehicle the dealer owns at a large discount to its book value or (b) find a cheaper new car with a large factory rebate. The bank is going to loan anywhere from 80% up to 125% of the vehicles invoice or wholesale book. (Others will do more but I don't think your credit profile well support it) there are only three ways to roll over substantial negative equity with less than perfect credit. (1) money down or clear title to another trade (2) a factory rebate and (3) find a car dealer owns at a discount book- here is a hint: look for a late-model used-car of the same type as a new car that is currently offering a large rebate. When a new car offers a large rebate the late-model used cars are forced to sell at a discount to compensate and compete against that new car. Does that make sense? For instance, if a brand-new Ford focus has a $2500 rebate then 2010 focuses are rolling through the auction at a substantial discount in order to compete with the new vehicles. It's generally not a dollar for dollar discount by the close (depending on the type of car) (4) you can make up $2-$3000 of negative equity by not trading the car in but retailing the car yourself through craigslist.com the dealer is going to put an actual cash value on your trade representing a wholesale value regardless of what he shows for it on the contract... by retailing the car yourself, you benefit from the spread and not the dealer
My other thought is that due to your credit situation the bank you financed through did not allow the dealer to lay you away too dramatically and you aren't carrying that much negative equity. If this is the case, then retail the car on craigslist for the payoff or more and go find a cheaper car.
Sometimes raising your insurance deductibles or shopping for cheaper insurance will save you $50-$60 a month as well.
If you supply me with the additional information I can tell you exactly what to do because you do not want a repossession on your credit bureau also in the meantime do not be even 10 days late on your payments so refinancing a new car is doable. It can be intimidating to go into a large franchise dealer with bad credit compared to the independent "rock lot" dealer down the street.... don't be! 90% of car salesman had worse credit than yours ... I promise! I would never step onto a lot until I was certain from the back-and-forth e-mails I had exchanged with that dealer that he could help me and or I was preapproved. Having bad credit does not eliminate your ability to negotiate the best deal you can!
I am committed to staying with you on this and answering any and all follow-up questions you have so that when you receive your survey asking you to rate your experience here at allexperts.com that you will have no hesitation in giving me perfect tens in all categories. My personal e-mail address is roadloans@gmail.com you can contact me there as well for a faster turnaround time.
Thank You and Have a Happy New Year!
Roger
