22 yo, got my first big boy job and walked out of a dealership with a $35k car at 18% interest. 60 months, $500 down. dumb, i know.
been making payments for a year and total owed has hardly gone down. on top of $550/mo insurance. i’ve been budgeting / slightly increased income, currently built a small emergency savings, working on cutting down some higher interest credit card debt before i deal with the car.
question is, what’s the best way to cut my losses? refinance when credit is better? i believe i can’t sell the car until it’s fully paid off? am i just truly fucked unless i find a way to scrape up $30k cash?
thanks in advance. it’s killing me to think what this money could have been invested for a few decades.
how to cut losses with 1000/mo car loan?
byu/biohackenthusiast inpersonalfinance
Posted by biohackenthusiast
14 Comments
> what’s the best way to cut my losses?
Pay more towards the loan.
Get the loan paid off.
> refinance when credit is better?
Is it not better now? Why not try refinancing *now*?
> i believe i can’t sell the car until it’s fully paid off?
You need a car even if you sold it, yes?
> am i just truly fucked unless i find a way to scrape up $30k cash?
The way out of a loan is to pay it off. How you do that is up to you.
Pay $2k a month instead of $1k.
You can sell the vehicle whenever you want, but you’re contractually obligated to pay off the loan when you sell it. If you sell the vehicle for less than you currently owe the lender, you’ll have to come up with the extra money to pay the remaining loan balance.
$550/month for insurance?! Are you a terrible driver with terrible credit?!
Get gap insurance and make sure you’re not at fault when the car is totalled
18% interest is god damn criminal. Refinance the car, and if you can’t get below 10%, just sell it.
It’s a 35k car. What is the loan balance and the market value now? (Private party sale)
This is bad, but not a disaster. A $35k car is expensive, but not crazy. If you had done this with a $70k car, you’d be really chopped. You need to avoid additional violations. You’re probably near the point where you finally start to see the principal drop. You can probably reduce that insurance, but there’s risk there too. If you wreck the car and insurance doesn’t cover, damn. I think you need to stay the course, watch that principal drop and get out when you can. See what you’re refinance options are.
I mean if u give us an estimate of your income we would be more accurate in helping you out.
22 yrs old, $550/mo for insurance and $1,000/mo you’re spending basically $1,550 a month just on your vehicle alone- add gas ($) expenses to it and it may be a little higher.
What other expenses do you have? Rent? Utilities ? Phone bill?
And on top of that, you have how much credit card debt do you have ?
What’s your disposable income after expenses per month?
Wow did you talk with someone like your parents before you signed this deal? You got raked over the coals on the terms
You can sell it before it’s paid off. You’re responsible for the difference in what you can sell it for in the open market and your loan balance.
Don’t have to tell you, bad decisions at a young age, learn from this, please.
Sell the car. Improve your credit. Buy a junker, bike, or horse.
And check out Dave Ramsey and his financial principles.
Pay it off faster so you don’t lose more in interest
Did they at least wait until you got off the lot to high five each other? Good lord.