$14000 negative equity help

[Benjay9812]

I own an currently paying an auto loan for my 2013 Elantra GT. Before this vehicle I had been paying a loan on a 2007 g6, and before that a 2003 grand am. Both my previous cars ended up having big problems and I had to get rid of them(it wouldn't have made sense to repair them). Anyways, I accumulated $14000 debt which is now tacked onto the $13000 I paid for my Elantra resulting in a $27000 car loan at the age of 21 co-signed by my father. I am paying a ridiculous amount of money for this car and though I've been affording the payments it just isn't reasonable to be paying this much. Does anyone have any advice on what I can do now* ? Please no criticism on my past decisions .

[Petunia 100]

I own an currently paying an auto loan for my 2013 Elantra GT. Before this vehicle I had been paying a loan on a 2007 g6, and before that a 2003 grand am. Both my previous cars ended up having big problems and I had to get rid of them(it wouldn't have made sense to repair them). Anyways, I accumulated $14000 debt which is now tacked onto the $13000 I paid for my Elantra resulting in a $27000 car loan at the age of 21 co-signed by my father. I am paying a ridiculous amount of money for this car and though I've been affording the payments it just isn't reasonable to be paying this much. Does anyone have any advice on what I can do now* ? Please no criticism on my past decisions .

Welcome to the Saving Advice forums, Benjay.

What do you want to do about the car loan? Selling the car won't clear the debt. Unfortunately, this is the result of rolling negative equity from one car to another.

You're still very young. Resolve now to learn from past mistakes and make better decisions in the future. In my opinion, that's really the best thing you can do.

What do your income and living expenses look like? If you are careful with every dollar, you should be able to throw extra at your car loan to get from under this debt as quickly as possible.

I think those Elantras are very nice cars. Take good care of yours and it should be a reliable car long after the loan has been paid in full.

[Benjay9812]

Welcome to the Saving Advice forums, Benjay.

What do you want to do about the car loan? Selling the car won't clear the debt. Unfortunately, this is the result of rolling negative equity from one car to another.

You're still very young. Resolve now to learn from past mistakes and make better decisions in the future. In my opinion, that's really the best thing you can do.

What do your income and living expenses look like? If you are careful with every dollar, you should be able to throw extra at your car loan to get from under this debt as quickly as possible.

I think those Elantras are very nice cars. Take good care of yours and it should be a reliable car long after the loan has been paid in full.

Right now my income is low..I got laid off from my landscaping job and work part-time for 15 hours a week. I still haven't been able to collect my unemployment but I am currently looking for another job. Things aren't looking good, my income is close to $400 take home while my expenses are about $600 without gas or food. (Just car payment, insurance, and phone). Currently my biggest obstacle is finding a job as quickly as possible. Before I was laid off, monthly income was $2200 take home. What's yoir advice on how I should go about clearing my debt?

[Petunia 100]

Right now my income is low..I got laid off from my landscaping job and work part-time for 15 hours a week. I still haven't been able to collect my unemployment but I am currently looking for another job. Things aren't looking good, my income is close to $400 take home while my expenses are about $600 without gas or food. (Just car payment, insurance, and phone). Currently my biggest obstacle is finding a job as quickly as possible. Before I was laid off, monthly income was $2200 take home. What's yoir advice on how I should go about clearing my debt?

It's going to be quite difficult until your income increases. How are you managing now? Drawing from savings? Using credit cards?

I suggest you begin tracking your spending. Most people are surprised when they see in black and white how much they are spending on unnecessary items. I know I was.

Once you have more income than expenses, you can begin to make real progress.

Maybe there is some room for savings on your insurance and telephone bills? Have you shopped your insurance around, to make sure you are getting the best rate you can? How about your phone plan? Many of the people here have discovered Ting and Republic Wireless, which offer some very inexpensive plans.

You said your father co-signed for you, so I hope that means you did get a nice low interest rate on your car loan?

Best of luck to you with your job search.

[disneysteve]

What's yoir advice on how I should go about clearing my debt?

The way to attack the debt is to up your income. You say you are looking for work. What does that mean? Are you looking for a job in your field or are you looking for anything and everything you possibly can? No job should be too menial or beneath you at this point. Waiter, pizza delivery, retail stockroom, dog-walking, hauling construction materials, scrubbing toilets, whatever you can get. You can't live on 15 hours/week. You have landscaping experience? Great. Have you contacted every landscaper in town to try and get a job? Have you considered going out on your own and lining up some landscaping work? I'm sure for a couple hundred bucks, you can pick up a mower and edger on craigslist and start doing some lawns. If it snows where you live, start lining up some shoveling jobs now. Put flyers in everyone's mailbox to let them know you're available. I know we are always looking for someone to help shovel our walk when it snows.

There are always jobs out there. You just need to find them - or create them yourself.

[BuckyBadger]

I'm getting the sense that you're searching for a different answer. Are you wanting someone to tell you that you should declare bankruptcy or something?

The answer is that you craw out from under this debt.

How you do this is by slashing all expenses and increasing your income. If your dad cosigned this thing (which was a terrible idea on his part, but that's over and done with now) he's probably pretty motivated to help you get this thing paid off.

Are you living at home? How are you surviving on $400 a month? Cut your phone to a $10/month prepaid plan. Stop paying for gas except to drive to interviews and your job. All the time that you're not going on interviews or working should be spent trying to make a few hundred bucks a month. House sit. Walk dogs. Rake leaves. Anything is better than what you have now.

Honestly, your best bet is to impose on your parents until you get a job. Then impose on them some more while you save EVERY SINGLE PENNY from your new job and pay that car off AS SOON AS POSSIBLE. I don't care if you have one of those crazy 6 year loans. Pay it off in two years. Then keep the car for the next 10 years - at least.

What's the term of that loan? How much are your other expenses?

It's time to get serious about this - owing $27k on a $13k car is a big deal and you need to treat it as such. I'm amazed that they let you do such a thing...

[snafu]

The bright spot in this dismal picture is that you've been smacked by life's challenges early on with time to fix the giant mistake and not ever repeat adding bad debt to new debt. As mentioned, your number one task is to get work and resulting income. Tell everyone you know thst you need work. Most jobs are by referral from people who know you. Your job is to get a job so you should be out the door every morning to knock on doors, visiting landscapers, visit sites, visit restaurants where you might need to start as a dishwasher or morning prep staff. Don't worry about hearing 'No,' I think the ratio is 12 rejections for even a 'check back later.' Evenings add your ad to CraigsList or any free outlet to get work cutting grass/shovelling snow and drop off flyers in an area with potential.

If you're living at home, by mid afternoon do whatever you can to be helpful. Clean, do laundry, vacuum, prep meals, set table, take out trash, look after your best resource. I hope you get unemployment...with the rates so low, you are at risk. Wishing you best luck in your quest for employment.

[ua_guy]

The bright spot in this dismal picture is that you've been smacked by life's challenges early on with time to fix the giant mistake and not ever repeat adding bad debt to new debt. [...]

Exactly this.

Although, I'm not sure how any bank let you roll that much negative equity into a new loan disbursement on the Elantra (usually they only allow ~120% of the car's value to be borrowed). Unless you didn't take an auto loan and did something like a personal line of credit.

[disneysteve]

I'm not sure how any bank let you roll that much negative equity into a new loan

So many of the debt problems in this country are caused by sloppy lending practices. As long as lenders keep giving ridiculous loans far beyond the ability of the borrowers to repay them, the problems will continue. Lenders need to become more like good parents and learn to say no, but of course that's no good for business so it will never happen. Nobody seemed to learn anything from the whole financial meltdown a few years ago. They're back to lending money freely to anyone with a pulse.

[greenskeeper]

Uneducated borrowers not the lenders are at fault. Why is personal finance not taught in our schools?

[disneysteve]

Uneducated borrowers not the lenders are at fault.

Uneducated borrowers are a problem too but if the lenders would be required to not lend beyond the borrowers means to repay, that would avoid a lot of problems.

Look at credit cards. They give credit cards to college students with zero income and then everybody gets all upset that students are coming out of school with thousands of dollars in credit card debt. Before getting a credit card, you should have to prove that you have a sufficient income to pay your bill.

Or look at the housing mess. At the peak of the fiasco, people were getting loans with nothing down, interest-only payments, with mortgage amounts of 4 or 5 times their annual income. There's no way they could afford that but the lenders were all too happy to make those deals. They had to know those loans would never get repaid.

[JulieAlbright]

In regards to advice in this particular case, I also got the feeling that the OP is looking for a way out of the loan.

2 main problems with that.

1. For many places in our country, no car = not being able to get hired for a job. I don't know if that is true for the OP or not. It really depends on public transportation and walkability of his area. But, defaulting or bankrupting out of an auto loan often means loss of the car through repossession or voluntary sale. It is likely much better to concentrate on making more money and getting the thing paid off.

2. Defaulting or Bankruptcy is just going to throw responsibility for loan upon his co-signor, which can be disastrous for family relationships.

I suggest number one sitting down with your parents and talking about the loan and asking for them to help finding a way out.

Then I realized that the OP asked for no criticizing of the past decisions that led to this. But really it is the past decisions that have caused this problem. I'm guessing given the OPs age, he is on about the 3rd car in 5 years. You need to STOP doing what a lot of people do in buying cars you can't afford and then not driving them long enough to make the purchase price worthwhile.

For instance, my own car is 8 years old and I suspect I won't even think about replacing it for at least another 8 years, and my financial position if much greater than yours. You can read around about finances and automobiles on many finance websites and in financial advice books but it all boils down to this. Cars can be wealth killers. That is what you are finding out here.

[ua_guy]

Uneducated borrowers not the lenders are at fault. Why is personal finance not taught in our schools?

The lenders share equal blame. Steve mentioned housing markets--they loaded up on subprime debt, lending to anyone and everyone, and they passed around that debt like a hot tamale. They knew it was a load of crap. Was that in their shareholders best interest if it ultimately collapsed their own markets? I don't think so.

But yeah, personal accounting should be taught in public schools. It is, to some extent, depending on where you go, and what class you take on an elective level.

[Weird Tolkienish Figure]

I own an currently paying an auto loan for my 2013 Elantra GT. Before this vehicle I had been paying a loan on a 2007 g6, and before that a 2003 grand am. Both my previous cars ended up having big problems and I had to get rid of them(it wouldn't have made sense to repair them). Anyways, I accumulated $14000 debt which is now tacked onto the $13000 I paid for my Elantra resulting in a $27000 car loan at the age of 21 co-signed by my father. I am paying a ridiculous amount of money for this car and though I've been affording the payments it just isn't reasonable to be paying this much. Does anyone have any advice on what I can do now* ? Please no criticism on my past decisions .

You paid $27000 for a $13000 car essentially?

Two ways out: bankruptcy or pay off the loan.

How good is your credit? Might be able to funnel some of the money to a low apr credit card.

[disneysteve]

Two ways out: bankruptcy or pay off the loan.

Not that I'm recommending this - because I'm not - but if OP were to file bankruptcy, wouldn't the co-signer (OP's father) be held responsible for the debt?