$16k negative equity on a car, how do I get rid of this?

Submitted by VeryDumbWithMoney t3_1275uvh in personalfinance

Mistakes were made, I rolled over a previous car loan into my current car. I want to be out of debt and eventually save for my future, investments, retirement, a house. I don’t have a need for this car, I have a different primary car that I’ve been using. Total loan is $36k and I have had dealerships and website appraisals all be at $20k for the car so I’m down $16k of dumb-tax before I can sell this mistake off. It needs suspension work and was quoted $6.5k to fix it by the cheapest shop locally, so if I do private sale I would be mentioning this and I would likely get less than $20k. I tried getting quotes for personal loans to cover the $16k but I was getting aprs of around 19% so no way that’s even an option. What can I do?

The car is a 2014 Porsche Cayman base with 100k miles that has had two accidents that I did not notice when buying because I was younger and stupid. It is $800/month at 11% apr for 65 more months for $36k total.

My other primary car is my family’s handed down 2004 Toyota Sienna minivan with 210k miles and she’s pretty ugly but it works and it’s reliable.

I make $85k/year as a nurse and have no other debt. I have a credit score of 735. My monthly obligations excluding the car and car insurance is $1200/month, including grocery budget and gasoline. I can definitely afford the Porsche but I have no use for it, I’m not that into cars anymore either. I’m more of a motorsports guy and I’d rather invest the money and use the leftovers for karting as a cheaper form of motorsports fun.

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CJ-Me t1_jee5lbv wrote

People pay for classes in many different ways. Seems you paid for a personal finance class through a dealership. The goal at this point is to learn from the class, so you don't have to take it again.

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VeryDumbWithMoney OP t1_jeeuykv wrote

Yup I definitely feel like I’ve had this mistake engraved into my mind, for the past many months I’ve been thinking of ways of how to get out of this mess and I’ve also been paying off previous debts too, this is just the last one. Especially recently I’ve been obsessed with finances, budgeting, and running numbers and learning about anything money and tax related. Reading books on general finances, real estate methods, philosophy of money, etc has been my favorite pastime recently as well as podcasts and and finance YouTubers. I’m much more knowledgeable now than I was even just last year and don’t think I’ll ever forget this mistake/awakening.

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jcastro777 t1_jee3za2 wrote

The cheapest 2014 Cayman on Autotrader right now has 109k miles and is listed for just under $30k, so even needing suspension work it would probably be worth at least posting it for sale and trying to get 25k for it before selling it to a dealer.

Is 36k the payoff amount quoted from your bank today? Or just the sum of all the future payments. At 11% interest the payoff today is likely thousands less than the sum of all future payments, and is actually what you need to sell the car.

If you don’t want to take the personal loan and don’t need the space you could try selling the minivan and using that money to pay for suspension repairs on the Cayman if it looks like the car is otherwise reliable. Front struts are a pretty common replacement item on most cars around 100k miles, especially performance cars, so this doesn’t seem like it’s an indicator the car will be problematic.

If your credit is good you could try refinancing the Cayman to bring your rate down, it probably won’t drop a whole lot but even 7-8% is better than 11%. Then just pay it off aggressively until the loan balance is below the value of the car and sell it, or if you sell the minivan to fund the suspension repairs keep it until it’s paid off and keep driving it.

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VeryDumbWithMoney OP t1_jeevvmy wrote

$36k is the payoff. That $30k Porsche may not have any accidents or damages, mine has one minor accident and one major underbody damage accident both from previous owner, but yea it doesn’t hurt to list it and see what people say.

For the minivan, although no one else in my family uses it (because they think it’s hideous) and I am the only one that uses it, its still my dads and I can’t really sell it. He would sell it to me for maybe $800 but I could probably only sell it for maybe $3-4k

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carpooler42many t1_jee1nxk wrote

My cousin’s husband in the military did something so similar before they married! Don’t beat yourself up, just learn a lesson for the future.
He garaged his Porsche for a few years, received a work bonus , repaired it and then sold at a loss. It’s a party story that gets a winch and a chuckle from anyone who hears it. Everyone makes errors of emotion.

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GeorgeRetire t1_jeeiee8 wrote

>What can I do?

Sell the car for as much as you can get, and pay off the remaining loan balance.

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AppState1981 t1_jeebd6c wrote

There is no way to fix this. You simply have to keep making payments if you can't get a loan for the difference

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HorizontalBob t1_jeeo35r wrote

Do you have 16k? Do you have 10k? If no to both, keep making payments.

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lilfunky1 t1_jeejpjo wrote

the only way to get rid of $16k of negative equity is to dump $16k cash towards the principal amount owed on the loan.

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RonBurgundy2000 t1_jef0lgz wrote

There is no easy fix short of insurance fraud (flood, fire, snowy off-ramp)… it’s an expensive lesson, but just have to save up money to pay it down. Unless you have the funds to do a private sale and pay the difference.

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Whoisntcj t1_jee14cp wrote

  1. Have you checked out how much your payment would be ok to borrow the 16k needed to pay the car off
  2. You essentially need to just pay down the loan on the car . Doesn't matter if you take the loan out or just put extra towards it . But, be warned that waiting until you hit equilibrium will take a while .
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