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Started By
Message
Getting Out Of A Vehicle You Are Upside Down On?
Posted on 10/23/17 at 7:59 am
Posted on 10/23/17 at 7:59 am
Not sure if this is the right board for this but it seems the intelligent people hang out around here.
I have a 2014 GMC Sierra 6" lift 4WD decked out I bought new in 2014. At the time my commute to work was about 5 minutes. I have since been reassigned to a job where I have a 120 mile round trip commute a day. I priced my truck on KBB and it appears it is worth about $20-$22k (although it didnt let me put all the customizations in) I currently owe $26k on the truck.
I am want to downgrade to something more fuel efficient due to my current commute. I do not have a large chunk of money to put down on a new vehicle. My credit is fair but not great 700ish. We just purchased a new home as well.
Am I stuck until I can get right side up on this thing or is there a way to get out from under it without having to shell out $10k to cover the delta and put a little towards another vehicle.
Any insight or help would be greatly appreciated.
I have a 2014 GMC Sierra 6" lift 4WD decked out I bought new in 2014. At the time my commute to work was about 5 minutes. I have since been reassigned to a job where I have a 120 mile round trip commute a day. I priced my truck on KBB and it appears it is worth about $20-$22k (although it didnt let me put all the customizations in) I currently owe $26k on the truck.
I am want to downgrade to something more fuel efficient due to my current commute. I do not have a large chunk of money to put down on a new vehicle. My credit is fair but not great 700ish. We just purchased a new home as well.
Am I stuck until I can get right side up on this thing or is there a way to get out from under it without having to shell out $10k to cover the delta and put a little towards another vehicle.
Any insight or help would be greatly appreciated.
21
Posted on 10/23/17 at 8:03 am to 3andOut
The "intelligent people" will likely chime in shortly.
I am wondering if you could trade it in and "over pay" for the new purchase, thus wrapping the shortage.
I am wondering if you could trade it in and "over pay" for the new purchase, thus wrapping the shortage.
Posted on 10/23/17 at 8:03 am to 3andOut
People will downplay this but lease a cheap car.
Posted on 10/23/17 at 8:10 am to 3andOut
Don't think there is a good answer for you unfortunately...
List the truck on Craigslist (or something similar) and see if you can get a buyer with a high price to see if you can get a little bit better than 22k, get a small personal loan from a bank to pay off the difference. Learn a valuable lesson and buy a slightly used vehicle that doesn't depreciate 10-15% when you drive it off the lot. Let someone else pay for that automatic depreciation - and then buy theirs when they repeat the same mistake over and over.
Only buy new when you have enough money to buy the vehicle.
List the truck on Craigslist (or something similar) and see if you can get a buyer with a high price to see if you can get a little bit better than 22k, get a small personal loan from a bank to pay off the difference. Learn a valuable lesson and buy a slightly used vehicle that doesn't depreciate 10-15% when you drive it off the lot. Let someone else pay for that automatic depreciation - and then buy theirs when they repeat the same mistake over and over.
Only buy new when you have enough money to buy the vehicle.
Posted on 10/23/17 at 8:13 am to 3andOut
1) Sell some stuff to cover the delta
2) Save a few months to cover the delta
3) Trade it in at a loss and roll the negative equity. You will be even more upside down on the next car.
4) Roll the negative equity into a lease. You will be overpaying again, but there will be an expiration date when you will break even again. However, at that point you will need the means to buy another mode of transportation.
I would do a combination of 1 and 2, plus sell private party where you can get the most return on the "upgrades" you have put into it.
2) Save a few months to cover the delta
3) Trade it in at a loss and roll the negative equity. You will be even more upside down on the next car.
4) Roll the negative equity into a lease. You will be overpaying again, but there will be an expiration date when you will break even again. However, at that point you will need the means to buy another mode of transportation.
I would do a combination of 1 and 2, plus sell private party where you can get the most return on the "upgrades" you have put into it.
Posted on 10/23/17 at 8:13 am to 50_Tiger
quote:
People will downplay this but lease a cheap car.
Not with a number of miles he is driving a day, this is a bad idea...
Posted on 10/23/17 at 8:29 am to wickowick
Totally over read the 120 mile commute part. You are correct.
Posted on 10/23/17 at 9:18 am to 3andOut
quote:
3andOut
What's your greatest motivator here?
1)Is it just to save on gas? How much would you be saving?
2)Are you trying to get out of what could be an absurdly high truck note?
3) Realizing that you're upside down on your truck, are you trying to right this ship before it gets worse?
Drive slower? Pay extra on truck?
Posted on 10/23/17 at 9:21 am to 3andOut
How many miles are on the truck. I have a 2014 Silverado with 41,000 and non 4x4 and NADA says it is worth $25875 clean trade in.
I would try to sell it to a private buyer because all the modifications will not help you with a dealer. Financing the negative equity in the new car is only going to prolong the problem because trucks have a better resale value than smaller fuel efficient cars. You would be averaging about 31,000 miles per year just to work and back along and it is going to depreciate the value of the new car fairly quickly.
I would try to sell it to a private buyer because all the modifications will not help you with a dealer. Financing the negative equity in the new car is only going to prolong the problem because trucks have a better resale value than smaller fuel efficient cars. You would be averaging about 31,000 miles per year just to work and back along and it is going to depreciate the value of the new car fairly quickly.
Posted on 10/23/17 at 9:23 am to 3andOut
You need to try to sell the truck with what you owe if the KBB value is below what you owe, then try to buy another car with little down, would just have a bigger payment. Have you considered going back to the dealership where you bought that truck? They may be able to work something out but I don't know I really hate dealing with car salesman. frick them
Posted on 10/23/17 at 9:45 am to 3andOut
If you can find someone to buy it for close to KBB do it and eat the loss.
If not, keep the truck until it dies and be sure to chose wisely with next vehicle purchase.
If not, keep the truck until it dies and be sure to chose wisely with next vehicle purchase.
Posted on 10/23/17 at 9:47 am to 3andOut
look to buy a car with a substantial sale, then finance what you are upside down on after the trade.
Posted on 10/23/17 at 10:12 am to 3andOut
First option would be to private sell as high as you can and come out of pocket for the rest.
Second option would be to buy something smaller and roll the balance into the new note. This is not a great option. But it may be better than continuing to get killed on gas.
Seems like lots of places today let you finance 100 percent of the costs.
Second option would be to buy something smaller and roll the balance into the new note. This is not a great option. But it may be better than continuing to get killed on gas.
Seems like lots of places today let you finance 100 percent of the costs.
Posted on 10/23/17 at 10:19 am to 3andOut
You can roll negative equity into a new loan as long as you don't go over the MSRP of the new car.
for example, you go trade in your truck on a Ford Focus (insert whatever car suits you). If the MSRP on the Focus is $26k, and you get to a selling price of $21k, that leaves you with $5k available to cover negative equity on the trade.
With the rates dealers are offering a new cars, this will be the cheapest option outside of selling some stuff around your house to cover the negative equity.
I would not make a habit of doing this either.
for example, you go trade in your truck on a Ford Focus (insert whatever car suits you). If the MSRP on the Focus is $26k, and you get to a selling price of $21k, that leaves you with $5k available to cover negative equity on the trade.
With the rates dealers are offering a new cars, this will be the cheapest option outside of selling some stuff around your house to cover the negative equity.
I would not make a habit of doing this either.
This post was edited on 10/23/17 at 10:20 am
Posted on 10/23/17 at 10:22 am to CorkSoaker
quote:
keep the truck until it dies
Or this. What type of vehicle are you thinking you are getting? What's the difference in gas mileage?
For example, if you're getting 20 mpg hwy now and you upgrade to 25 mpg, you'll save 6 gallons per week. Let's say it's $2.25/gal. You're saving $13.50/wk or $700/yr.
If you're $6,000 under water... it'll take you 8 years to break even on getting better gas mileage.
Posted on 10/23/17 at 10:32 am to UpstairsComputer
This is the right answer, keep the truck. Especially with the prospect of gas prices at current levels for the next decade or so.
It is almost never worthwhile to buy a more expensive car with marginally better mileage to replace a car with "bad" mileage. The math in the previous post is all the answer you need.
Edit: You're only underwater if you sell, otherwise you've got a functional, useful truck that gets you to a job with no hassle. Take that money you'd plow into another depreciating asset and buy some index funds instead. They'll put money in your pocket every quarter and year over the next 10 years you own the truck.
It is almost never worthwhile to buy a more expensive car with marginally better mileage to replace a car with "bad" mileage. The math in the previous post is all the answer you need.
Edit: You're only underwater if you sell, otherwise you've got a functional, useful truck that gets you to a job with no hassle. Take that money you'd plow into another depreciating asset and buy some index funds instead. They'll put money in your pocket every quarter and year over the next 10 years you own the truck.
This post was edited on 10/23/17 at 10:37 am
Posted on 10/23/17 at 10:38 am to GoIrish02
quote:
It is almost never worthwhile to buy a more expensive car with marginally better mileage to replace a car with "bad" mileage. The math in the previous post is all the answer you need.
His truck is likely getting more like 12-15 mpg based on the modifications. If he gets a car that gets 35mpg, he will be saving 4.5 gallons per day, and that's if you use 15mpg for the truck. That's almost 23 gallons saved per week. At current gas prices, that's over $2500 per year in savings.
And who said he was buying a more expensive vehicle?
If he will be keeping this job for the next few years, this is a rare time where a change of vehicle can make financial sense.
Posted on 10/23/17 at 10:44 am to LNCHBOX
I appreciate your example, but you're forgetting he'd have to spend 8,000 - 10,000 to buy a relatively new car (<10 years old Japanese car) that gets 35 mpg.
Then he's at a ~3+ year break even on the $2,500/year savings just to pay for the replacement car, plus he still has the dormant truck with an ongoing note and a guaranteed $4,000 loss if he sells.
Switching cars will cost at least $12,500, probably more like $15,000, and doesn't improve his financial position at all. He becomes cash poorer and takes on the uncertainty of a older car's maintenance to not keep a working truck that costs $0.15 per mile to drive.
Then he's at a ~3+ year break even on the $2,500/year savings just to pay for the replacement car, plus he still has the dormant truck with an ongoing note and a guaranteed $4,000 loss if he sells.
Switching cars will cost at least $12,500, probably more like $15,000, and doesn't improve his financial position at all. He becomes cash poorer and takes on the uncertainty of a older car's maintenance to not keep a working truck that costs $0.15 per mile to drive.
This post was edited on 10/23/17 at 10:58 am
Posted on 10/23/17 at 10:55 am to GoIrish02
quote:
I appreciate your example, but you're forgetting he'd have to spend 8,000 - 10,000 to buy a relatively new car (<10 years old Japanese car) that gets 35 mpg.
You're the one forgetting things. That's less money than what he currently owes on his truck.
quote:
Then he's at a ~3+ year break even on the $2,500/year savings just to pay for the replacement car, plus he still has the dormant truck with an ongoing note and a guaranteed $4,000 loss if he sells.
Who said he's keeping the truck and buying the other car? Yo're warping the example.
ETA:
quote:
Switching cars will cost at least $12,500, probably more like $15,000, and doesn't improve his financial position at all.
Your math doesn't check out.
This post was edited on 10/23/17 at 11:00 am
Posted on 10/23/17 at 11:07 am to bayoubengals88
quote:
1)Is it just to save on gas? How much would you be saving?
When I bought this truck (before adding the life and oversized Tires I was getting a 24-26 mpg. I am now getting half of that. Which hasnt been extremely noticeable until making long drives to work.
quote:
2)Are you trying to get out of what could be an absurdly high truck note?
My truck note is $650 but I can afford it.
quote:
3) Realizing that you're upside down on your truck, are you trying to right this ship before it gets worse?
I am trying to pay $1000/mo on it to get it down.
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