Who’s right – me or my husband?

Deal Score0

My husband wants to get out of his car loan. We have tons of negative equity in this car because we rolled over negative equity from the car before this one. Our payment is thus very high. Our finance company (Wells Fargo) won’t work with us to lower our interest rate, thus lowering our whopper monthly payment. Mind you, my husband’s hours have been cut due to the economy and we are struggling to keep our payments current on our mortgage which is more important. Here’s where we disagree: my husband wants to have the car voluntarily repo’ed (I am the co-signer). Our credit already pretty much sucks, but we are really going to need to refinance our house in about a year or so because our temporary modification will run out then and our monthly payments will go up about $ 400/month. My thoughts are that we really need to try and up our credit scores this year so we can refinance and I think a repo will make our credit even worse. My hubby is listening to people at work who are saying that it will only make a small dent in our scores and that we can pay back the deficiency balance after the repo (which will be probably about $ 15K) little by little. I say that they will take us to court, put a lien on our home, sue us, etc. My husband is using the defense that he wants to go and get another car using one of those programs where if you get laid off they will pay your car note for up to a year (he may get laid off too). And he wants to get a cheaper car, which is fine. But I really think its a bad idea to have a car repo’ed because it will hurt our scores a lot and leave us with a huge sum of money to pay back. What are your thoughts???? EXPERT advice would be helpful too…

  1. Reply
    April 30, 2011 at 12:35 am

    I’m no expert, but I’d say that you are correct. Never listen to “financial expert” coworkers.

  2. Reply
    Sgt Big Red
    April 30, 2011 at 1:05 am

    I would say you were right on this one.

    But I am sure our resident auto loan expert SPIFFMAN will answer this one correctly, so watch for his answer, if anybody knows he will.

    P.S. An automibile DOES NOT build equity, they depreciate so you never get what you paid for it.

  3. Reply
    April 30, 2011 at 1:49 am

    A car repo will significantly drop your scores.

  4. Reply
    stan c
    April 30, 2011 at 2:09 am

    ( You win)First off, if your credit is already shot, no bank will let him finance a new car. Second, no matter how you surrender the auto, all they need is 3 bids and it’s sold to the highest bidder and then they will come after both of you for the deficiency balance. Your only out in this situation is bankruptcy.

  5. Reply
    April 30, 2011 at 2:38 am

    Would you rather have a home or a nice car? You are heading towards neither if you listen to the “people at work”. The bankwill more than likely take legal action.

    Buying a new car will not be possible if you get your current vehicle repoed. What bank would lend you money for a new car when the one you had you couldn’t pay for? None. And these programs of job loss do not last the length of your loan and will be very hard to actually make a claim on. Why would a car company purposely lose money? Why not just give the cars away?

    You appear to have a debt and income problem. This is solved by decreasing the debt. Get rid of the car by selling it and sell everything else you can think of to pay the difference, even if you have to take a personal loan (if you can get one). increase your income (part time job for you, extra job for him). Clean offices, clean houses, odd jobs, garage sale, day labor etc.

    Best of luck.

  6. Reply
    April 30, 2011 at 2:49 am

    I agree with your husband. Voluntarily have your car repossess. Your credit is bad. You need cash. Save it in an emergency fund.

    Please note he will not be eligible for a new car loan or any of the new programs since he defaulted on this one. (pay cash and buy a $ 1,000 car).

    Don’t worry about them suing you or putting a lien on your home. The most important thing is to keep a roof over your head and have cash available for emergencies.

  7. Reply
    Lauren F
    April 30, 2011 at 3:04 am

    Why don’t you try to sell the car yourselves and then get a personal loan from a credit union to pay off the difference. Letting it go to repo is by far a bad strategy. You will be responsible for the repo fees, storage fees, auction commission, and the car will sell for pennies on the dollar, so you will be responsible for the deficiency as well.

    Can you possibly get a job (or a second job) or more hours to try to increase your income and pay down the loan?

    The idea your husband has about the layoff protection is sketchy – they might not approve you given the current situation – but I like his idea of a cheaper car.

    How about: sell this one, get a credit union loan for the negative equity, and by the cheapest used car you can find with cash (I mean really cheap – look for a $ 1,000 beater) until you get yourselves out of financial trouble. If you are worried about paying for a mortgage, you don’t want a car payment to distract you from that unless you want to live in the car.

  8. Reply
    April 30, 2011 at 3:09 am

    “Jason” is correct – your basic problem is that you have way too much debt, and “rolling over” negative car equity was very unwise. Sell the car and drive clunkers. Get part-time jobs for additional income. Cut spending to the bone – cancel cable TV and cell phones, etc. At least tell your husband to get qualified debt management advice from a non-profit organization – not from “experts” at work.

  9. Reply
    I Love Richard KHC
    April 30, 2011 at 3:58 am

    If your car gets repoed what makes him think that they will give him another car? ask him that, both of your credits will be hurt. I understand on the negative equity thing, I am in the same boat. My husband did loose his job, and we rent, we had a hard time getting the car we have so if ours got repoed then we wouldn’t be able to get a car.

    Good Luck

    I know it’s tough

  10. Reply
    Shane F
    April 30, 2011 at 4:51 am

    Well, I dont think it is a good idea to let your car repo’ed. I would say sell your car or let someone take over your payments. I was in the same boat when we cannot afford to have payments on our second vehicle about 3 years ago. We wouldn’t be able to sell the car because no one wants to buy for more than a year then we decided to let someone takes over my payments. Someone took over my payments for about a year so we decided to take his car back because we can afford now (I have a new job) and break our contracts. Someone agreed to give his car back because it is still his name on the loan. It works very well. It can be your relative or someone you know. If your husband lets it repo’ed and it will shoot your credit really bad. You will not able to refinance your home or it could be very high interest. Just try do your best and figure what you can do about this. Maybe like get a part time job or something like that. Good Luck!

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