My brother-in-law (25) has gotten himself into quite the mess. He took out a loan on a used SUV in January 2025 for $30,000. In October 2025 he traded it in for a new SUV for $50,000. He only received $17,000 on the trade in so $10,000 from the used car loan was rolled into the new loan. After some added services, warranty, and taxes the total loan is now $71,000 which is a monthly payment of $1,016 because the loan is for 84 months…
He makes $18/hr with no opportunities for overtime. That is a monthly income of $2,880, after taxes it's ~$2,200. Rent and bills are $1,200. This leaves no money for food, gas, insurance, etc. if he keeps the car. He obviously can't afford this car. He can't sell it because while it's brand new he is underwater $25-30,000 on the loan.
I have no idea how the credit union approved him for this loan. I saw the documents and he didn't disclose his income on the loan application. I assume they do some type of background check to make sure you can actually afford the loan before issuing it but I guess not in Ohio.
He is asking me for my help and I'm not giving him money for the loan but can offer advice. I only see a few options:
Option 1: File Chapter 7 Bankruptcy and build back his credit. My biggest concern is then his other vehicle at home is a 15 year old car which who knows how long that will last. If the car dies then he will need a new one and at 25% interest he would be back to paying an amount he again can't afford.
Option 2: Move in with me rent free and have every spare cent go towards the loan while getting a second job to help pay off the loan faster. While I don't have a problem with this I know he values his independence.
Option 3: I don't think this one is possible but… Contact the credit union and see if they will work with him on giving a personal loan he can payback for the underwater portion of the vehicle and sell the car. I'm unsure if credit unions do this but really it's the only option I see where he doesn't have to give up his apartment or mess up his credit.
Does anyone see any other options?
Underwater on Auto Loan Ohio
byu/RandomRedditQuestion inpersonalfinance
Posted by RandomRedditQuestion
39 Comments
That dealer and credit union absolutely screwed your BIL over, this is predatory lending at its finest
Option 2 is probably his best bet honestly – swallow the pride, move in with you temporarily and attack that debt hard. Bankruptcy sounds tempting but you’re right about the 15 year old backup car being a ticking time bomb and him getting stuck with awful rates afterward
Has he tried calling the credit union to explain the situation? Sometimes they’ll work with people before things get nuclear, especially if they realize they made a sketchy loan
Option 4: Get a job that’s in line with the car he’s driving. Definitely the hardest option.
Option 3 is possible, but that amount would be totally unsecured, so it will be at a higher interest rate probably. And if his credit is already bad, they may not even approve it. But it can be done. And the monthly payment would be lower simply because it’s such a lower balance. To be honest, I’d do a combination of plans 2 and 3 if he would actually accept that and put the extra money saved in rent towards it. But, given his seeming financial irresponsibility, he may just spend that extra money irresponsibly too.
He could try a chapter 13 bankruptcy to lower his interest rate but what other bills does he have that he is behind on?
It’s insane he was approved for that amount with no Debt to income verification. Best way out unfortunately is probably more income. Second job AND cutting other expenses like rent if you are willing to let him move in are the best way without damaging his credit long term.
DO NOT let him ride share or Doordarshan with the vehicle the extra miles will put him in a deeper hole with depreciation if he wants to sell it at some point.
Please make sure he has GAP protection to cover if something totals it.
Option 2 is the way to go. He values his independence, but he valued having a truck more. Additionally, he should be getting a 2nd job until the truck is fully paid off.
I think helping him by allowing him to move in is nice, but do you think it will matter? Does he understand how stupid he was? Is he trying to learn and change?
“He makes $18/hr with no opportunities for overtime.”
He had no business buying the first car let alone the second one.
Get rid of it and take the credit hit.
“it’s the only option I see where he doesn’t (..) mess up his credit.”
That ship has sailed…
For starters, he could see if he can cancel the warranty and get some money paid back to the bank. That won’t help his payment amount but will reduce the outstanding balance. Then he should def move in with you and just hammer down that loan. As much as he can. That’s really the best possible scenario. Even if he let the truck go that balance is definitely big enough that he would be sued for it and his wages garnished.
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My guess is his credit score was sufficient for loan approval. It wasn’t too smart on credit union to do so. But the strict finance review is reserved for house mortgages. Automobiles are considered personal property and not subject to all the due diligence of a mortgage. That being said bankruptcy or moving in with you. For future financial decisions he should make it a point to call you before he engages in serious financial transactions. Also consider giving him a book or two on how to handle finances.
Get two more jobs. This is a life lesson
Option 2 and he should thank you every day that he is blessed with the chance. The dealer and bank fucked him, but he gave consent. I’m in the boat with the other people. I make $77,000 base (there’s a tenable bonus as well) and no one would tell me a $50,000 vehicle is smart. Getting into one not even making $40k a year is insane. Is his spouse working? If not, they need to be.
Yikes!! Not any really good options here. I make 55k a year and can’t, with good cause, afford a 50k car. I’m just sorry that they approved him for the loan.
Don’t let him move in with you. Unless he makes more money and has a careful spending plan you are setting yourself up for a bad time.
You will be butting heads in no time.
Option 4. Learn the value of a dollar and what is affordable. Unfortunately, too late for him to benefit from this now, but important for the future.
That is a prime example of predatory lending. Doesn’t sound like he could afford the first car. They had no business willing him another one.
Dont pay off debt with debt unless the interest is considerably lower.
The car needs to be sold and dealing with the fallout of having to pay money for something he no longer owns should be the tough pill and lesson he needs to swallow. Repairs on a older car is cheaper than a new car, a few grand in repairs is still better than being under by 30k or more.
Your talking being -3,000 or -30,000 the math on that isnt difficult but repairs on an older vehicle is too often used to justify a new vehicle while ignoring the gross math equation. You want to look at your total costs not the short term “what payments can i handle” because that hurts more long term.
I’m a multi millionaire and I won’t even buy a $50,000 car. Yowza! He needs to take the bus
50k car on 36k income? Woof. That’s a disaster.
Sell the new SUV and get a new job to pay off the debt. Catch a bus.
Your BIL gets a lesson which is the most important thing.
was this the dealer’s credit union?
Does he eve need a suv???
Option 3. Not sure you want this chap living with you.
Sell the car buy a cheap used one and pick up a second job. Moving in with you would help him pay the underwater part. Dont let it be rent free. Make him pay rent
He needs to learn money management and budgeting. If you want hold the money in a separate account and give it back to him afterwards as a downpayment, investment in retirement or whatever.
Filing for bankruptcy should be his absolute last option. Not option 1
See what he can sell the SUV for. Put every penny towards the loan. Use the 15 year old car while paying off the remained of the loan. Hopefully you also have public transportation near you.
If you do let him move in with you, require he takes a financial literacy course. Because no one with five brain cells would think selling a new car for almost half price, and adding the remainder of that loan to an even more expensive car loan is a good idea.
I don’t understand people like this. No matter how much money I have, I’m not pissing it away on a depreciating asset.
No chance at overtime means plenty time for another job, no?
He should never have been approved. $18 per hour, is KIA money…no shade intended. Thats just the world right now. Used Toyota or Honda with 100k miles money. This feels like predatory lending. Why’d they approve? Because he becomes their obligate slave. $1060 per mo. Is >40% of his take home, assuming he’s working 2000 hours a year. After gas, food, lodgings, insurance, phone, internet, and incidentals… yikes.
I wonder if it’s not in his best interest to file for bankruptcy or the equivalent. You might consider contacting the branch manager for the dealership and have a polite conversation. Explain how bad this looks. The dealership is in for the whatever they paid for the vehicle plus the 10k they covered. Assuming they make 25% on each car sold… they also assumed liabilities on his behalf for roughly $47k. Guy makes $18 an hour, how long before he burns out and defaults… now the bank owns it in whatever condition if they can find it. They stand to gain like $25-30k off this after 84 months… but, it’s an unsustainable investment that was made for the commission, little chance of that debt being fulfilled. Either the branch manager agrees and will work with you to make this go away for everyone, or they’re are complicit and maybe that buys you something. Either way, your bros credit will be shit for a time.
Option 1 – I don’t understand why people think an old car is just going to suddenly stop working. There are signs and he should be driving the old car and trying to sell the new one.
Option 2 – This sounds like you inviting this to become your problem in some way.
Option 3 – Makes no sense. A loan to get out of a loan?
Any option that doesn’t involve giving him money as he clearly has no ability to handle a budget.
Makes more sense to let him live with his terrible mistake. Have him get another job to get more income and (if he wants independence) live out of the truck for a while.
Option 2 and start working a second job. Dude could’ve bought a brand new Chevy trax for $20k
Do not let him move in. He’s clearly not responsible. Sometimes you need to let purple sink to learn to swim…
I’m rich and driving a 16 year old Honda because I don’t feel comfortable with a payment like that.
I would find a higher paying job, crush the loan and enjoy the car. 7 years is tough to get burned on.
He needs a bigger shovel to dig himself out of this. If he trades in the car, he will be in debt but not as much. Then he needs to get a beater, whatever is going to get him to and from work.
He’s screwed unless he can get a job making 3 times what he’s currently making. The vehicles going to get repossessed and he’ll be responsible for whatever is left after they resell it and have no vehicle or good enough credit to get another one. I see only cash cars in his future.
He values his independence but he sold his independence away with this car…
He should cancel extra services and warranties if those can be refunded. He should also contact the credit union, preferably the loan manager, to see what his options are.
Ultimately, he either needs to get a second job or let the vehicle go back to the bank.
My car is 13 years old and I have no plans to replace it anytime soon. There’s no reason he can’t drive his older vehicle.