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About nine months ago, I bought a truck for about $29,000. I sat down with everything
and I still owe $29,000 on it and been making my payments every month and I need help trying
to figure out how to get out of this situation. What's the interest rate?
14%. Well, that'll do it. Ouch.
The interest payment you're making is probably as much as your monthly payment,
so they're just washing each other out.
How much can you sell it for, Nathan?
I just got it quoted for $17,500.
Why is it so low? Did you roll over negative equity?
No, I did not.
Was it for a trade-in or a personal sale? And where'd you get it quoted?
It was at a local dealership. I was looking,
I was just trying to figure out what I could get it for and they evaluated it at $17,500.
Who's they? The dealership?
Yeah, the dealership, yes.
Well, that's the worst place to get it valued. I would look at the private party value on Kelly
Blue Book because there is no way a $29,000 car nine months later is worth $17,000.
No, it should be more like $22,000-ish probably.
Now, obviously you got screwed on this deal, so they may have sold you a $17,000 car for
$29,000 for all I know. I'm especially charging you 14% interest. Was your credit just shot?
No, I don't remember exactly what it was, but it was around the high 780s.
How did you get a 14%? I mean, I just don't understand that.
Do you have any other debt?
No, I do not. When I bought the truck, at my job, I was making $28 an hour.
And then at the beginning of this year, my whole company got let go.
And I've taken a almost $7 pay cut at my current job.
What are you making now?
It will be salary. Right around $21.62 an hour.
Okay, so about $44,000, $45,000 a year probably?
Correct.
Okay. Well, this truck needs to go. And so you might need to save up the amount you're
underwater on just to get rid of it, and that would still be worth it. And you go get you a
beater car to get you from A to B in the meantime until you can save up and buy something used in
cash. But-
There's no other way to get out of the payments.
That plus all the insurance. Come 21, my insurance is around $300 a month.
Yeah, that's expensive for a young guy. A lot of risk for the insurance companies.
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See stores for details.
With the gas and everything at the end of every month, I'm scrunching pennies to try and-
If your credit score is still good, I'd go down to your local credit union and see if
they can give you a loan for the difference you're underwater on, but still try to get top
dollar for it. That might be private party. That might be like a Carvan or CarMax, but just see
how small you can make that gap you're underwater on. Get a loan for the difference plus some to get
you a beater car from A to B, and you'll be out of this thing and be able to save up and-
And your payments, you're going to feel the difference of what you're doing now,
and it's not making a dent, right? Versus a, I don't know, a $12,000 loan that you pay off
and then go get a beater car for the season.
It'll have a lower interest rate for sure.
Yes. And yeah.
What's your payment right now?
I'm paying 586 a month.
Ouch. Plus the 300 in interest. So you're going to be-
And it's not even doing a dent to the loan.
That just hurts.
Well, you're probably paying 586 in interest. So every month, it's not moving the needle on the
balance. And so that's the issue.
I looked at the loan. I think it was like $11.14 a day on interest.
Ouch.
Yeah. And Nathan, remember this rule of thumb too, that what you have in motors and wheels
should be no more than half of your annual take-home pay. And you exceeded that getting
a $30,000 truck while making $45,000 a year. So keep those vehicles below that so that you don't
get stuck in the situation again. Thanks for the call.
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