Upside Down Car Loan

Well, the good news is that you have a car on your hands that is decent on gas mileage. Is it your only transportation, or do you have something else to drive, if you get rid of this one?

I see your options as follows:

-sell it, and try to get what you owe on it. However, be cautious of selling it for less than you owe, because the car is most likely the collateral for the loan, right?

-if you feel you can't sell it for what you owe on it, can you possibly refinance the loan, to lower the payments and make it easier to afford until you can pay it off? I realize you may not want to pay on this any longer than you absolutely have to, but if the payment is an issue, and the car still runs well, I would say keep it and refinance for lower payments.

-if neither of the options above look good, you may have to keep the car and just keep paying on it as it is now. You definitely don't want to let it go back to the finance company or bank and have a repossession on your credit record - that's a worse deal than you got on the car in the first place.

+1 to Sue's advice above!

thanks wulf! :-)

Good job Sue, I second.

The problem with selling the car, is that you usually need to hand over the title to the new buyer at the time you sell it. BUT the finance company has the title. So it's kind of a catch 22 -- you can't give the buyer the title until you actually pay that car off; and you can't pay it off until the new buyer actually pays you. Essentially the buyer would need to be comfortable "waiting" for you to get the title. Personally, I wouldn't trust anybody enough to do that -- if I was buying the car and the seller didn't have a clear title in their hand, then I wouldn't buy it.

Actually, that's not always true - I think it depends on the state you live in. I live in Michigan, my van is financed by the dealer, and the title is in my hands. However, the van is still collateral for the loan.

Maybe it's different when you buy a new car as opposed to used? I know when I lived in another state, the financer kept the title until the car was paid off - new or used - so I was kind of surprised when I moved to MI and bought a vehicle - and received the title in the mail! I actually called the dealer, and they told me that's how it works here.

I know in my state Nebraska you have thirty (30) days to produce the title.