QuestionLast year I purchased a 2009 Dodge Grand Caravan for around 18K; put 4K down and paid on it for a year at 19.95% interest (my credit score at time of purchase was 570). I refinanced about 4 months ago at 14.87%- still not great but better than it was. I was not the first owner (a rental agency was) and I should have listened to my gut when I felt buying a rental was a mistake, but considering my credit situation, I felt I was lucky to even be approved for an auto loan. Not to mention, I was only offered a few models for purchase because I was a subprime borrower, and this van at the time seemed like the best option.
Well, now I’m regretting this purchase, simply because this van is a piece of junk! The transmission is constantly jarring and kicking, and my A/C went out in the middle of a heat wave! I am constantly having various electronics issues, such as the dash cluster/radio illumination going on and off. Over the 18 months I’ve had it, I have read various online consumer complaints pertaining to this van- so I know I’m not the only one. I’m trying to do all the research I can to see if I can get out of this before the value depreciates even further. I did not purchase an extended warranty; I didn’t think I needed it! It currently has 69,000 miles on it.
The only issue I have holding me back is that I have negative equity on it. I still owe around $13,900 and my trade-in value in good condition is $12,862 according to Edmunds.com. I probably won’t even get that since the A/C doesn’t even work. Private party value is higher than what I owe on it, but selling is a longer process.
I don’t have a lot of money. I am the only one working to support my family, and I’m in school full time. I am trying to do double payments as much as I can to get the value below trade-in, but it is really difficult considering my interest rate.
My question is- should I keep this van, which is further falling apart each day I have it (I’m just waiting for that transmission to go-that will be $4,000 I don't have), and pay on it? Or do I get rid of it, get something better, and take the brunt of that extra 2K negative equity on a new auto loan? Or maybe I could lease?
I just need to figure something out before this mistake becomes more of a headache than it already is.
Thanks!
Answer
car guy 
car guy
Hi Natalie,
Sorry to hear you are having issues with your vehicle. I have some ideas and advice I think will help you out considerably. But first off let me say, to you and anyone else who is reading this answer: You should never buy a car with what feels like a gun at your head. The limited choices you are offerred by the dealer (via the salesperson) are presented in such a way as to make you think you have no other alternative when in fact reality dictates otherwise. The choices you are made to think are the only ones you have are the choices where the dealer will be able to make the most profit...move an old age unit, or provide some relief to someother set of circumstances which help him, at your expense. In your case Natalie, the bank agreed to finance you for a decent chunk of money and your 570 beacon score, while not a top 1-2 tier score ...is good enough, with previous paid auto credit, along with the ability to demonstrate stability in your living and employment situations make you look better on paper than you might think, and the large down payment most likely dropped to the bottom line for the dealer.
That said let's talk about your issues:
1. I don't know what part of the country you live in but you need to know that for the last 6-9 months (and longer) the used car market has been hot to nuclear hot in most parts of the country. Consequently, it is likely your car may be worth slightly more than you think ... I ran an MMR (Manheim Market Research...this is what can best be described as the current 'spot' market for your vehicle based upon auction results obtained in the last 2-4 weeks of what your exact vehicle with almost your exact miles/options etc. actually did sell at auction) on your van based upon only what you told me and your vehicle has an MMR of $12,750 and a trade in value of $12,150...the difference between the two are things like arbitration and buy fees and anticipated reconditioning / detail expenses etc. Moral of the story ...You are NOWHERE NEAR as bad off as you think. Here is the smartest thing you could and should do ...and if you follow my instructions and do it...then you will not lose any money at all and in fact will in all liklihood make money about and beyond what you currently owe.
2. The key to this is going to require you to be patient, creative and peristent. You need to stop allowing yourself to be cast by the dealer into the part of the 'retail customer" to his "retail dealer". Why? because it's expensive and because you don't have too.
a) Have your car cleaned and washed ...and possibly even a full detail if you think it needs one.
b) Take about 24 -30 pictures of it from every angle and of every option inside and out.
c) List your van on Craigslist and any other 'free" forum you can find... and price it at the low end of the middle of the wholesale /retail spread... (example ...van has a wholesale book value of approximately $13,000 and a retail book of approximately $15,950 ...do a search on autotrader to determine the price range (cheapest to most expensive thenfigure out what the avg betrween the hi/low is and price you van under that midpoint by about 100-500 dollars depending on your feeling at the time and post it up and keep rolling it to the top as often as you can (daily? ) ...
d) Whatever you do DONOT trade it in ... that is the best way to donate your hard earned money to someone who doesn't need it as badly as you do. The dealer beats you in 3 different ways...
1. He sells you his car for more than he paid for it
2. He gives you less for your trade in than it's really worth
3. He sells you after market itens like extended service contracts, Gap, and a zillion other things including the financing which he arranges for you and which the bank allows him to 'write up the rate by 1-3 pts and then pays the dealer 70% of the total increase in the interest you pay based upon the full term of the loan. (potentially $500-$2000.00 bucks)
How do you win....Just like i am telling you ...when you trade your car in your are giving it up for it's wholesale value and not a cent more. It doesn't matter how much he shows you you are getting for it on the contract because every dollar over it's ACV (actual cash value) he gives you is just a discount to his retail price ... when you trade a car in think of it as you selling your car for wholesale and buying a new one for retail...Bad deal! When you patiently sell it yourself (it's really easy and you will save 1-3k of real dollars for your efforts...then you are selling your car for retail and then when you get your next car you are able to buy the dealersfor wholesale or very very close because you have taken away on of his favorite sticks he uses to beat you with.
The paperwork required to sell a car is very simple and can be found with the instructions on any state DMV website and YES ...you can do this even when you still owe money on the car..
The key to getting top dollar for your van will be for you to have lots of big pretty nice looking pictures and since CL limits you to 4 ...put all the rest on someplace like photo bucket and add the link to that album at the bottom of the body of your ad. In the body of the ad itself make sure you describe the vehicle and try to tell stories about the van (good ones only)like:
"I am forced to sell my van which is breaking my heart....it has been such a loyal and reliable member of our family and has safely gotten us to and from every where we needed to be for the last 2 years!"
Stress the positives like:
"oil changed every 5k miles, all services done" ...
"one owner" or
"only 2nd owner' things like that ...
while you are in the process of selling your van ...be actively picking out and searching for the car you want to buy as soon as it sells ... if at all possible ...and hopefilly your beacon score will have jumped up with the payment history on the van ....and arrange for your own financing thru a local credit union and even call the bank you are paying now and ask them to pre approve you... then after the van is sold... and with your financing in your pocket you will go to whoever has the car you have decided to buy next and this time when the sales person/manager tells you the price of the next car is 18k ...you will get to tell him to sharpen up his pencil ...alot.
A couple of rules you can never break ...
1. Be patient...DONOT buy a car emotionally ...
2. Don't let the seller think for any reason that you love the car
3. NEVER NEVER NEVER negotiate the price of the new car with the dealership while you are sitting in their showroom or anywhere near their store.... you will only negotiate from home in front of your computer and on your phone. You will only go to the sellers place of business to test drive the car ...then you will act like it's not the right car (wrong color, too many miles, not enough options, too many options/miles etc. and get thje guys card and GO HOME!!! YOU WILL NOT RETURN TO THIS STORE NO MATTER WHAT YOU ARE TOLD UNTIL YOU GO BACK DOWN there AFTER the terms of the deal are agreed to and only then to sign papers and drive home. THATS IT!
If you have any follow up questions please know that I am committed to answering everyone of them until you are completely happy and staified with the answers I have given you . Once that happens you will be sent a survey from allexperts asking you about your experience awith me etc. ...if there is any reason you aren't able to truthfully answer those questions and give me a score of a perfect 10 and bonus points (lol) then send me an email first and i will clairify whatever it is you felt was done in a less than professional and courteous manner so that you can score your experience with 10's I am in for the full ride and will hold your hand through the entire process if you ask me too. my personal email is roadloans@gmail.com and I generally respond faster to emails sent there much faster than anywhere else. thanks and good luck!
Roger
The Car Guy!
