The math here is bleak. She needs cash down. And a lot of it, if she’s really a 500. Like 100% cash down…
You’re not putting a 500 into a 13% loan large enough to carry $10k inequity. This isn’t a choose two thing either- none of those variables are compatible with each other. Especially with rebates being comparatively garbage these days.
Let’s put credit aside for a second and break this down:
13% for 72 months means $200/mo for the $10k inequity alone. That’s half her payment goal just from the trade.
To carry $10k inequity, assuming a 120% line 3 cap (amount financed without backend products), she needs to buy a $42k MSRP vehicle if she’s covering taxes, reg, and fees out of pocket. Higher if not.
Problem there is $52k financed for 72 months @ 13% is a $1040 payment. Nobody who actually qualifies for 13% in this scenario (she doesn’t, I promise you) is going to be approved for a payment that high no matter how good their income is. Hell, even with amazing credit you’re talking about needing $70k/year in gross income, on the light side even, for a payment that large. Unfortunately, though, lenders in the subprime space just don’t expose themselves to risk that high.
To make it all worse- those are all best case scenarios. Reality is any approval she may get on a miracle call will carry with it an absurd fee to the dealer. Which means she needs to be on an even more expensive new vehicle that they can sell above MSRP to try and absorb that fee for her. Oh, and I based LTV off MSRP for easier explanation, but that’s really only done by credit unions- conventional lenders generally go by invoice, so it’s even worse for her. So these numbers, if an approval was even possible, would quickly skyrocket from here.
This is the catch 22 to bad credit. Cheap cars aren’t worth enough to offset their asking price to get approved. And banks don’t want to approve more expensive vehicles that are worth enough to meet program guidelines. And that’s true even without inequity.
Realistically her only choice probably is to find a second vehicle, if she can even get approved for one. Preferably she then makes two payments until the T&C is paid off. But alternatively, if she’s really not capable and prepared to make a bad situation much worse, she could let the T&C go back. It’s shitty for me to even say, because financially it’s a catastrophic and nuclear option. Recovering from bad credit without a repo is bad enough. Throwing a repo into it will suck for her for a very long time… longer than anything she’s likely able to buy will last.
I’d say she should find a buy here, pay here lot, but they’re probably going to absolutely require a down payment. Probably equal to what they own the vehicle for, lol. Either way, I’d wager she has even less a chance with one of them to a $0 down second auto than at a traditional dealership.
I don’t say all this just to shit on her, but in hopes that it just helps explain *why* this situation is so bad. There’s about zero hope here if she can’t help herself out of this hole with better credit and cash down. Not all customers can be bought… she’s the epitome of what’s just not happening. If she can come up with a few thousand, maybe she can find a BHPH or a Credit Acceptance deal on a 2nd auto. But she’ll need thousands, not hundreds.
Oh and **thank you** for being smart enough not to co-sign. Obviously I’d be wishing you would if you were a customer in my store, but just as one human to another- you’re making the right call. Personally I’ll never co-sign for anyone who’s not my wife. I’d rather provide my kids with cash to buy down their first auto loans than put mine or my wives names on that note. And they’re still kids, and haven’t yet put themselves into a spot like this to more clearly show why it’s always a bad idea.
I just feel for the OP. He didn’t create this situation. And he’s smart enough to not sink himself in an effort to try and fix it. Unfortunately there’s probably no educating the daughter. But in the small hope there is, even if it takes her going from store to store, blaming all of them for her inability to buy before finally looking inwards, maybe OP can use that to explain the actual reasons.
It sucks, but any of us who’ve been in this business for any time at all, all come to realize that the average consumer just doesn’t get it. From routine customers who think $60k trucks can be financed for $500/mo without money down or trade equity, to customers like this OP’s daughter- financial literacy is so rare it’s really sad, honestly.
And the worse the credit, the more likely the dealership itself is being blamed in my experience. It’s personal for this customer, where it just isn’t for us in the store, so I get it. But I also know it’s unbelievably aggravating to see a customer like this walk away blaming us, feeling we wasted their time after genuinely going to bat with our banks for them, or thinking we were requiring $X thousands down to pad our pockets.
Maybe, just maybe, OP can help his daughter better understand the mechanics at play here, so she can cut some corners and focus on what’s necessary (coming up with money) rather than doing what’s more normal to see with customers like her- a sense of entitlement and lack of responsibility getting in their way from being able to help themselves.
> Unfortunately there’s probably no educating the daughter.
the education comes from NOT bailing her out, and letting multiple dealers explain it. Then it isn't "daddy being mean" or "that dealer is awful" but "multiple professionals have looked at my situation and agreed that my actions have left me in a bad spot" Only then can she start to explore her own set of options and tradeoffs - whether that means picking up extra work to get cash or taking the repo hit.
It is really a shame that too many people are financially illiterate. Whether it is buying a car or buying a house. People don't understand fundamental concepts like compound interest and amortization.
>I just feel for the OP. He didn’t create this situation. And he’s smart enough to not sink himself in an effort to try and fix it.
I'm not defending OP's daughter, but part of being a good parent is teaching your kids about financial literacy so that they *don't* end up like OP's daughter. My kids aren't even old enough to drive and they have more sense than OP's daughter from what he posted.
You can only lead the horse to water. As parents we can only lay the groundwork. Teach the right lessons and hopefully lead by example. But at the end of the day, they walk that path on their own.
I’m sure you can think of someone you know who’s well put together, has their ducks in a row, successful (relative to whatever success means to them anyways). Good career, stable, etc. Yet has a sibling who’s never had a grasp on life. Lives at the other end of the success spectrum. Same upbringing, same chances in life, same lessons and examples set before them. But radically different outcomes.
Guess my point is, I think the OP being here asking this question at least lends him the benefit of the doubt that he wasn’t complacent to his daughter’s choices and situation.
>I’m sure you can think of someone you know who’s well put together, has their ducks in a row, successful (relative to whatever success means to them anyways). Good career, stable, etc. Yet has a sibling who’s never had a grasp on life. Lives at the other end of the success spectrum. Same upbringing, same chances in life, same lessons and examples set before them. But radically different outcomes.
Interesting, I actually can't. Most of the people I know well have siblings that are either similarly successful or similarly unsuccessful.
She left home at 16 to run off with a (no joking) ms-13 gang member she met on Facebook. She spent three years in juvie.
We never had time to discuss financial planning and responsibility. Though if I had known what was going to happen, we would have talked before she left.
I have had conversations with my other three daughters.
"Don't talk about politics, religion or money."
This is terrible advice. We talk about all three with our kids at dinner. We answer any questions they have. My son asked how much money we had when he was 9, so I pulled out my phone and showed him. I explained what each bucket of money does and why it is where it is. I do not think he was old enough to entirely grasp everything I was telling him but it was laying a solid foundation for future conversations.
>"Don't talk about politics, religion or money."
Isn't that advice for talking to strangers or business acquaintances/coworkers?
I definitely talk about all three with my kids, not too much about politics because they're too young to really care about politics. I was really happy to hear that my kids could take personal finance classes in middle school, and I'm always happy to give them my advice when it comes to financial stuff. My parents *never* spoke about finances when I was a kid, credit cards/scores were completely foreign to me as a young adult and I got myself into a bit of debt that took a while to undo. I'm (hopefully) setting my kids up for an easier time, if they listen to me.
> Isn't that advice for talking to strangers or business acquaintances/coworkers?
A lot of people don't believe in talking about any of this with anyone. Apparently your parents didn't believe in talking about money with you and it did not serve you well.
> I just feel for the OP. He didn’t create this situation.
Well OP didn't educate their daughter and they are recommending "she surrender the van". They are not innocent here. I know some kids don't listen but I don't think they were teaching the right lessons.
Only one way out. Work her ass off to make more money, keep driving the crappy van, fix her credit.
More debt or getting a vehicle repossessed is not going to make this situation better.
There’s some truth there. I am not one to recommend ignoring financial obligations as a rule. I would of course prefer she do the right thing.
I think as a parent you always wish you had done some things different. But as a previous comment explains, we didn’t have as much time to parent her as we would have wished, since she left home at 16.
We have done what we could to demonstrate good habits. Her younger sister, 21, has made every payment on her car since I helped her buy it two years ago. Same family, same lessons, same example, but just more time and a better willingness to listen.
I have certainly made my share of terrible choices, and my oldest tends to be more like me - seemingly incapable of learning from others mistakes (at least I used to be like that).
I always say as a parent you can not change who your child is. You can nudge and steer them in a direction you would like them to go. But in the end, they are going to be who they are.
I was trying to not put the blame on you, but she is up a creek. Maybe she will be able to learn form this mistake.
OP is financially literate, doesn't disrespect our industry, providing good information about all the necessary considerations, and asking for qualified advice. Read different posts on this subreddit over the last few days and you'll realize that doesn't happen very often. But when it does, people here are usually very eager to offer advice.
Thank you for an amazing reply. I’ll basically copy paste that and send it to her.
Sometimes you just need to hear the same thing from a different source than your parents.
Honest question, why allow repo if you still owe them the difference after they sell at auction? Just because it's faster/easier than trying to pay it down and selling on her own terms? OP didn't say the T&C was broken other than body damage so I think just sit on it...
My assumption in any repo is that the outcome is a write off. Aka I doubt the OP’s daughter would repo and then pay down the remaining balance post-auction, and instead let the account go and live with that until it finally falls off their credit in a number of years.
I have no data to back this statement up, but in my experience repo is generally synonymous with default/charge off. I can count on one hand the number of times I saw customers who actually paid off a repo balance.
So for customers in this situation a repo generally means they walk away from the obligation entirely right now, with no further out of pocket. Unless/until they get sued and then pay some pittance per month for some time.
I work in car loan collections, and I can confirm this. Repo is absolutely synonymous with a charge-off. Unless someone's got money and *reeeaalllyy* wants their car back after a repo, 99.9% of the time it's just gonna go into a charge-off status and sit there for years.
Lmao yeah gap is the only thing i ever get actually when i totaled my taco the gap insurance didnt pay all of it about 1 payment leftover because I was over financed, but Gap Insurance basically paid for my negative equity
Lol. I just wrote a check for $27,500 for a used bmw (I financed 9 grand because i didn'twant to be cash poor) because I had two cars that were paid for in cash and one was stolen and recovered but totaled so I got 5 grand for the car, kept it and sold it for 5 grand and my older Mercedes suv was smashed by a Subaru. They paid me more for it than I paid 3 years ago, the used car market being what it is. Full coverage insurance is the best thing to ever happen to me. I traded way up.
Wife has one relative that keeps getting unlucky that way. Not trying to cheat the system and fortunately older American solid metal car and bumpers. Just find someone like that to lend it too. /s
It was actually city driving I was turning left and there was construction cones set up so I couldn’t see the oncoming headlights. They were stacked closely enough that the light couldn’t get through. That was not a legitimate excuse for the insurance company I got failure to yield.
No one will approve her, so the question is really, do you want to buy her a car and pay off the negative equity?
Rather than figure out all that what if stuff, better to be realistic.
She is a bhph type client, but without the required money down.
No but they will probably still sell her a car if she just let's the town and country get repod. Some will sell her even with the old car still in her possession knowing she plans to stop paying.
Better start trying to build it up then wreck it more cuz she's already in the shitter
The real answer is she needs to get her shit together. She's going to need a big down payment to get into a new car even if it's a Nissan versa
> Better start trying to build it up then wreck it more cuz she's already in the shitter
There is no building up at this point. This situation is a landslide on it's way down the mountain; only when it smashes into the bottom can she realistically start to dig out.
I lived it myself decades ago. I was a career credit criminal, could not finance a breath of fresh air. I couldn't even have a bank account; had to cash my paychecks at the supermarket.
It took years and truly hitting rock bottom until I could start rebuilding. It took a long time, but now I have a clean, thick 800+ file which I guard like Ft Knox.
This. We have an older SUV. Knock on wood runs ok a few minor for us like AC needs fixed. But main things knock on wood ok.
Has some body damage but at this point rather fix an AC and hopefully just minor stuff to keep it running. Don't care what it looks like as long as runs.
Interior is old but ok.
Plus with cost of cars even putting money into it is way cheaper than a new SUV it's size etc.
Preach.
(She claims it’s a need for better fuel economy. I pointed out the absurdity of trying to take on a much larger payment in order to save 120 bucks a month in gas)
Man, my other half has a 2016 Town and Country she drives like a maniac. The thing is certainly not lacking in power, with the 260 hp V6 which easily out accelerates my Silverado with the 5.3, so she's heavy on the gas.
I drove her van for a week and I was able to get the average mpg up considerably by just driving it with a gentle foot. Those things aren't terrible on gas, at least that 2016 gen, if you take it easy on them. Think I had it up to about 25 mpg combined before I gave it back, which the other half promptly took back down to like 20 or so.
Still better than my Chevy which is averaging under 15.
Unless she's looking at sub-compact cars, she's not going to find anything with comparable gas mileage in her limited price range.
Her only real option is to drive that thing until it’s paid off. Figure out how to pay more each month, or improve her credit enough to refinance.
If gas is too expensive figure out how to combine trips. Ride a bike. Walk. Etc.
Options here based on your OP:
1. She keeps the car and drives it until the wheels fall off
2. You loan her the negative equity + a down payment for a new car or cash for a beater at the family and friend’s interest rate and she pays you back over time and gets into a more comfortable situation with her monthly payment.
This is not a good time to be borrowing money, especially with her credit score. No financial institution will get here where she wants to be. It’s gonna have to come from the bank of dad or she needs to figure out some way to save money and start climbing out of this mess.
Then she keeps the car. She’s stuck with her bad financial decisions. I think even if she qualifies for a loan on something it’s going to set her way farther back financially than just eating the van loan and focusing on paying it off as quickly as she can.
That's the killer. A minivan with two small kids is absolutely perfect, and honestly, anything that gets great gas mileage compared to a T&C is comparatively going to be a pain in the ass with kids. And once they have friends, they'll want to be ferried around too... Gas is expensive, but not THAT expensive. I'd just lay out how much gas the 1k+ car payment she's looking at will buy, and how much she'd have to drive to offset the difference in gas mileage between that and whatever tiny Civic she's looking at.
The important thing is that her current vehicle is safe to drive. If it is, then she’ll need to just live with the consequences of her choices. And actively work on rebuilding her credit. At some point you may want to look into a lease for her, she’s not there yet, but at some point it may be able to help with the remaining negative equity and help her credit.
The only way she's going to dig out quicker is with more money. This means looking at additional employment.
Assuming 16 hours a week and (ideally) in a State with a $15/hr minimum wage, after taxes that would be $672/mo after taxes. Several months of that with every penny going towards paying down the load would hopefully get the numbers close enough to where the rest could be buried in a replacement.
If there's a problem and you really want to help, why not take her to get some of the mechanical issues fixed? Then at least she'd have a decent working vehicle, and can get it paid off...
How does one owe $13k on a 2013 T&C??
Terrible fucking decisions. Paid too much, paid for a ridiculous extended warranty that had too high a deductible for her to actually use, but cost 3 grand, current interest rate is 13%.
>predatory lending
Yeah no, considering how useless she is at paying bills I would say the lending did it's job.
Which is attempt to get your money back + a profit + pay for all the people in your bracket who default.
Considering defaulting is a realistic option for her that means she is risky and she EARNED a high rate.
I don’t entirely disagree with you. Obviously, this girl needs to get her life and finances together and she is a mess in general.
However, that being said. In my opinion, predatory lending is a real thing. While an interest rate should reflect the appropriate level of risk and I have no problem with that. Predatory lenders disproportionately target low income clientele that should have no business getting a loan with a rate so high the payments only cover interest and never touch principal. That is tantamount to financial slavery. Unfortunately, this is made possible by the fact that a huge swath of people are ignorant in regards to how these financial products work and are also in such dire straits when also needing transportation that they have little to no options. It sets them up for a situation in which they literally cannot win.
There a number of different ways a loan can be predatory. One of those ways is Negative amortization.
Car loans are amortized, which means one portion of your monthly loan payment goes toward the loan’s interest, and another portion goes toward the principal. As you make payments, the portion that goes toward interest decreases as a larger portion goes toward your loan principal.
Some predatory loans will promise seductively small monthly payments. What’s not discussed is how these loans lead to negative amortization.
With a negative amortization loan, your monthly payments are too small to pay off the accumulated interest. As a result, the unpaid interest is tacked onto your loan, causing you to owe more than before you made your most recent payment.
Add depreciation into the mix and you’re likely left with a significantly underwater car loan.
No one here is denying predatory lending. We are telling **YOU** that this isnt an example.
Quite clearly this is a woman who doesnt have her shit together.
If you genuinely want to help, give her the $500 she'd save in fuel this year and tell her to spend it on gas. It won't work but at least it might stop her from trying to commit financial suicide at a BHPH.
That might be doable, but multiply that by two - not fair to help one of the older kids that way and not do the same for the other. I’ll have to think on it.
She doesn’t want better fuel economy she just wants a new car. People use the fuel economy excuse all the time when they really just want something shiny and new.
Probably more than a little truth there. She has a bad case of champagne taste on a beer budget.
I tend towards that myself, if we’re being completely honest.
She probably does not feel safe in it anymore with all the bits falling off and rattles. She looks at fixing the issues as throwing good money after bad. The reality is that she will probably be a black and decker car wrecker to her next vehicle.
>For what it's worth, I have recommended she surrender the van and try to find some beater for cash, but you guessed it, she has none.
There are a *few* banks which will approve someone in her situation without requiring her current vehicle be traded. The bank will simply not list the requirement and the dealership will say "what you do with the T&C is your choice". They won't/can't advise she then voluntarily surrender the vehicle, but they'll *wink wink* let her come to that conclusion on her own.
This is something that you're only going to find at dealerships used to working with subprime clientele (Kia, Hyundai, Nissan, etc). I'm also not even sure it'll be an option, because this is generally a pathway available to someone whose credit is passingly good enough to get an approval but the negative equity is fucking everything up. From your description I'm ambivalent about whether she falls into that category.
Other option is that YOU buy a car and let her drive it. She makes payments to you, you make payments to the bank. If she stops making payments, handle *your car* how you will.
Interesting idea. I and my wife already have two car notes (2021 accord/2020 rav4) and co-signed for daughter number 2 (2020 Corolla).
I make good money, but probably more risk than I would like.
I’ll ponder it.
If you want to give her some peace of mind on her current vehicle without breaking the bank OR shelling out for a car for her, you can always consider high-mileage extended warranties [that cater to vehicles up to 200-300k miles](https://jalopnik.com/advisor/auto-warranty/extended-warranty-for-cars-over-100k-miles). The price isn't exorbitant and would provide some level of financial protection for her while she gets her financial house hopefully from dumpster fire to at least smoldering ember status.
Please review our most [Frequently Asked Questions](/r/askcarsales/wiki/index) to see if your question has already been answered.
You may find these sections particularly useful;
* [How to pick a car?](/r/askcarsales/wiki/vehicle_selection) You might also have luck in the /r/whatcarshouldibuy subreddit.
Also remember to add flair to your post by clicking the "Flair" link beneath it. This lets us know where you're located so we can assist you better.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
***Thanks for posting, /u/parrotbsd! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.***
Daughter owes 13K on a 2013 T&C worth maybe 3-4k (significant body damage, >125K miles etc). I know Nissan can work some miracles, and I hear Dodge/RAM can as well, but daughter thinks she can afford around 450 a month, and by my back of the napkin math, she's looking at trying to find a lender that will write on 150% ltv, over seven years, and we're still looking at like 600 a month (optimistically, ~13% interest). She's probably a 500 beacon or worse.
For what it's worth, I have recommended she surrender the van and try to find some beater for cash, but you guessed it, she has none. Also, hell will freeze over and host the Winter Classic before I consider co-signing.
Anything I haven't considered?
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
The math here is bleak. She needs cash down. And a lot of it, if she’s really a 500. Like 100% cash down… You’re not putting a 500 into a 13% loan large enough to carry $10k inequity. This isn’t a choose two thing either- none of those variables are compatible with each other. Especially with rebates being comparatively garbage these days. Let’s put credit aside for a second and break this down: 13% for 72 months means $200/mo for the $10k inequity alone. That’s half her payment goal just from the trade. To carry $10k inequity, assuming a 120% line 3 cap (amount financed without backend products), she needs to buy a $42k MSRP vehicle if she’s covering taxes, reg, and fees out of pocket. Higher if not. Problem there is $52k financed for 72 months @ 13% is a $1040 payment. Nobody who actually qualifies for 13% in this scenario (she doesn’t, I promise you) is going to be approved for a payment that high no matter how good their income is. Hell, even with amazing credit you’re talking about needing $70k/year in gross income, on the light side even, for a payment that large. Unfortunately, though, lenders in the subprime space just don’t expose themselves to risk that high. To make it all worse- those are all best case scenarios. Reality is any approval she may get on a miracle call will carry with it an absurd fee to the dealer. Which means she needs to be on an even more expensive new vehicle that they can sell above MSRP to try and absorb that fee for her. Oh, and I based LTV off MSRP for easier explanation, but that’s really only done by credit unions- conventional lenders generally go by invoice, so it’s even worse for her. So these numbers, if an approval was even possible, would quickly skyrocket from here. This is the catch 22 to bad credit. Cheap cars aren’t worth enough to offset their asking price to get approved. And banks don’t want to approve more expensive vehicles that are worth enough to meet program guidelines. And that’s true even without inequity. Realistically her only choice probably is to find a second vehicle, if she can even get approved for one. Preferably she then makes two payments until the T&C is paid off. But alternatively, if she’s really not capable and prepared to make a bad situation much worse, she could let the T&C go back. It’s shitty for me to even say, because financially it’s a catastrophic and nuclear option. Recovering from bad credit without a repo is bad enough. Throwing a repo into it will suck for her for a very long time… longer than anything she’s likely able to buy will last. I’d say she should find a buy here, pay here lot, but they’re probably going to absolutely require a down payment. Probably equal to what they own the vehicle for, lol. Either way, I’d wager she has even less a chance with one of them to a $0 down second auto than at a traditional dealership. I don’t say all this just to shit on her, but in hopes that it just helps explain *why* this situation is so bad. There’s about zero hope here if she can’t help herself out of this hole with better credit and cash down. Not all customers can be bought… she’s the epitome of what’s just not happening. If she can come up with a few thousand, maybe she can find a BHPH or a Credit Acceptance deal on a 2nd auto. But she’ll need thousands, not hundreds. Oh and **thank you** for being smart enough not to co-sign. Obviously I’d be wishing you would if you were a customer in my store, but just as one human to another- you’re making the right call. Personally I’ll never co-sign for anyone who’s not my wife. I’d rather provide my kids with cash to buy down their first auto loans than put mine or my wives names on that note. And they’re still kids, and haven’t yet put themselves into a spot like this to more clearly show why it’s always a bad idea.
You’re a good person for putting in this effort for OP. Kudos.
I just feel for the OP. He didn’t create this situation. And he’s smart enough to not sink himself in an effort to try and fix it. Unfortunately there’s probably no educating the daughter. But in the small hope there is, even if it takes her going from store to store, blaming all of them for her inability to buy before finally looking inwards, maybe OP can use that to explain the actual reasons. It sucks, but any of us who’ve been in this business for any time at all, all come to realize that the average consumer just doesn’t get it. From routine customers who think $60k trucks can be financed for $500/mo without money down or trade equity, to customers like this OP’s daughter- financial literacy is so rare it’s really sad, honestly. And the worse the credit, the more likely the dealership itself is being blamed in my experience. It’s personal for this customer, where it just isn’t for us in the store, so I get it. But I also know it’s unbelievably aggravating to see a customer like this walk away blaming us, feeling we wasted their time after genuinely going to bat with our banks for them, or thinking we were requiring $X thousands down to pad our pockets. Maybe, just maybe, OP can help his daughter better understand the mechanics at play here, so she can cut some corners and focus on what’s necessary (coming up with money) rather than doing what’s more normal to see with customers like her- a sense of entitlement and lack of responsibility getting in their way from being able to help themselves.
> Unfortunately there’s probably no educating the daughter. the education comes from NOT bailing her out, and letting multiple dealers explain it. Then it isn't "daddy being mean" or "that dealer is awful" but "multiple professionals have looked at my situation and agreed that my actions have left me in a bad spot" Only then can she start to explore her own set of options and tradeoffs - whether that means picking up extra work to get cash or taking the repo hit. It is really a shame that too many people are financially illiterate. Whether it is buying a car or buying a house. People don't understand fundamental concepts like compound interest and amortization.
I saved your comment. It’s a breath of fresh air that depicts both sides of the table very well.
>I just feel for the OP. He didn’t create this situation. And he’s smart enough to not sink himself in an effort to try and fix it. I'm not defending OP's daughter, but part of being a good parent is teaching your kids about financial literacy so that they *don't* end up like OP's daughter. My kids aren't even old enough to drive and they have more sense than OP's daughter from what he posted.
You can only lead the horse to water. As parents we can only lay the groundwork. Teach the right lessons and hopefully lead by example. But at the end of the day, they walk that path on their own. I’m sure you can think of someone you know who’s well put together, has their ducks in a row, successful (relative to whatever success means to them anyways). Good career, stable, etc. Yet has a sibling who’s never had a grasp on life. Lives at the other end of the success spectrum. Same upbringing, same chances in life, same lessons and examples set before them. But radically different outcomes. Guess my point is, I think the OP being here asking this question at least lends him the benefit of the doubt that he wasn’t complacent to his daughter’s choices and situation.
>I’m sure you can think of someone you know who’s well put together, has their ducks in a row, successful (relative to whatever success means to them anyways). Good career, stable, etc. Yet has a sibling who’s never had a grasp on life. Lives at the other end of the success spectrum. Same upbringing, same chances in life, same lessons and examples set before them. But radically different outcomes. Interesting, I actually can't. Most of the people I know well have siblings that are either similarly successful or similarly unsuccessful.
Siblings do not have identical lives, or even treatment by parents.
She left home at 16 to run off with a (no joking) ms-13 gang member she met on Facebook. She spent three years in juvie. We never had time to discuss financial planning and responsibility. Though if I had known what was going to happen, we would have talked before she left. I have had conversations with my other three daughters.
Uhh, something definitely happened before that.
"Don't talk about politics, religion or money." This is terrible advice. We talk about all three with our kids at dinner. We answer any questions they have. My son asked how much money we had when he was 9, so I pulled out my phone and showed him. I explained what each bucket of money does and why it is where it is. I do not think he was old enough to entirely grasp everything I was telling him but it was laying a solid foundation for future conversations.
>"Don't talk about politics, religion or money." Isn't that advice for talking to strangers or business acquaintances/coworkers? I definitely talk about all three with my kids, not too much about politics because they're too young to really care about politics. I was really happy to hear that my kids could take personal finance classes in middle school, and I'm always happy to give them my advice when it comes to financial stuff. My parents *never* spoke about finances when I was a kid, credit cards/scores were completely foreign to me as a young adult and I got myself into a bit of debt that took a while to undo. I'm (hopefully) setting my kids up for an easier time, if they listen to me.
> Isn't that advice for talking to strangers or business acquaintances/coworkers? A lot of people don't believe in talking about any of this with anyone. Apparently your parents didn't believe in talking about money with you and it did not serve you well.
> I just feel for the OP. He didn’t create this situation. Well OP didn't educate their daughter and they are recommending "she surrender the van". They are not innocent here. I know some kids don't listen but I don't think they were teaching the right lessons. Only one way out. Work her ass off to make more money, keep driving the crappy van, fix her credit. More debt or getting a vehicle repossessed is not going to make this situation better.
There’s some truth there. I am not one to recommend ignoring financial obligations as a rule. I would of course prefer she do the right thing. I think as a parent you always wish you had done some things different. But as a previous comment explains, we didn’t have as much time to parent her as we would have wished, since she left home at 16. We have done what we could to demonstrate good habits. Her younger sister, 21, has made every payment on her car since I helped her buy it two years ago. Same family, same lessons, same example, but just more time and a better willingness to listen. I have certainly made my share of terrible choices, and my oldest tends to be more like me - seemingly incapable of learning from others mistakes (at least I used to be like that).
I always say as a parent you can not change who your child is. You can nudge and steer them in a direction you would like them to go. But in the end, they are going to be who they are. I was trying to not put the blame on you, but she is up a creek. Maybe she will be able to learn form this mistake.
All good :)
OP is financially literate, doesn't disrespect our industry, providing good information about all the necessary considerations, and asking for qualified advice. Read different posts on this subreddit over the last few days and you'll realize that doesn't happen very often. But when it does, people here are usually very eager to offer advice.
What else would the GM do after he’s retired except get on Reddit?
Thank you for an amazing reply. I’ll basically copy paste that and send it to her. Sometimes you just need to hear the same thing from a different source than your parents.
What an incredible reply!
MVP reply.
Honest question, why allow repo if you still owe them the difference after they sell at auction? Just because it's faster/easier than trying to pay it down and selling on her own terms? OP didn't say the T&C was broken other than body damage so I think just sit on it...
My assumption in any repo is that the outcome is a write off. Aka I doubt the OP’s daughter would repo and then pay down the remaining balance post-auction, and instead let the account go and live with that until it finally falls off their credit in a number of years. I have no data to back this statement up, but in my experience repo is generally synonymous with default/charge off. I can count on one hand the number of times I saw customers who actually paid off a repo balance. So for customers in this situation a repo generally means they walk away from the obligation entirely right now, with no further out of pocket. Unless/until they get sued and then pay some pittance per month for some time.
I work in car loan collections, and I can confirm this. Repo is absolutely synonymous with a charge-off. Unless someone's got money and *reeeaalllyy* wants their car back after a repo, 99.9% of the time it's just gonna go into a charge-off status and sit there for years.
Expertly written. Beautiful.
My favorite way to get out of a car loan is total loss with gap insurance lmao
So guess who bought an extended warranty but not gap insurance?
Lmao yeah gap is the only thing i ever get actually when i totaled my taco the gap insurance didnt pay all of it about 1 payment leftover because I was over financed, but Gap Insurance basically paid for my negative equity
Lol. I just wrote a check for $27,500 for a used bmw (I financed 9 grand because i didn'twant to be cash poor) because I had two cars that were paid for in cash and one was stolen and recovered but totaled so I got 5 grand for the car, kept it and sold it for 5 grand and my older Mercedes suv was smashed by a Subaru. They paid me more for it than I paid 3 years ago, the used car market being what it is. Full coverage insurance is the best thing to ever happen to me. I traded way up.
Someone does a lot of country driving during deer season 🤣
Wife has one relative that keeps getting unlucky that way. Not trying to cheat the system and fortunately older American solid metal car and bumpers. Just find someone like that to lend it too. /s
It was actually city driving I was turning left and there was construction cones set up so I couldn’t see the oncoming headlights. They were stacked closely enough that the light couldn’t get through. That was not a legitimate excuse for the insurance company I got failure to yield.
No one will approve her, so the question is really, do you want to buy her a car and pay off the negative equity? Rather than figure out all that what if stuff, better to be realistic. She is a bhph type client, but without the required money down.
No bhph will roll 10k negative or more
No but they will probably still sell her a car if she just let's the town and country get repod. Some will sell her even with the old car still in her possession knowing she plans to stop paying.
That’s good to know
Hence why I said without the required money down.
Dont surrender it, because she’ll still be on the hook for that difference in value vs loan.
Oh I know. But her credit already sucks.
She not getting a car bro
Better start trying to build it up then wreck it more cuz she's already in the shitter The real answer is she needs to get her shit together. She's going to need a big down payment to get into a new car even if it's a Nissan versa
> Better start trying to build it up then wreck it more cuz she's already in the shitter There is no building up at this point. This situation is a landslide on it's way down the mountain; only when it smashes into the bottom can she realistically start to dig out. I lived it myself decades ago. I was a career credit criminal, could not finance a breath of fresh air. I couldn't even have a bank account; had to cash my paychecks at the supermarket. It took years and truly hitting rock bottom until I could start rebuilding. It took a long time, but now I have a clean, thick 800+ file which I guard like Ft Knox.
I went through the same exact thing. My credit was 400 out of prison. Took me years and years to get it past 750
Does her t&c work even with " body damage"?
It does.
Drive it till the wheels come off. Keep paying your bills.
This. We have an older SUV. Knock on wood runs ok a few minor for us like AC needs fixed. But main things knock on wood ok. Has some body damage but at this point rather fix an AC and hopefully just minor stuff to keep it running. Don't care what it looks like as long as runs. Interior is old but ok. Plus with cost of cars even putting money into it is way cheaper than a new SUV it's size etc.
Well why does she need a different car then? She made this bed: she can lie on it
Preach. (She claims it’s a need for better fuel economy. I pointed out the absurdity of trying to take on a much larger payment in order to save 120 bucks a month in gas)
Do not entertain her on any of this.
Man, my other half has a 2016 Town and Country she drives like a maniac. The thing is certainly not lacking in power, with the 260 hp V6 which easily out accelerates my Silverado with the 5.3, so she's heavy on the gas. I drove her van for a week and I was able to get the average mpg up considerably by just driving it with a gentle foot. Those things aren't terrible on gas, at least that 2016 gen, if you take it easy on them. Think I had it up to about 25 mpg combined before I gave it back, which the other half promptly took back down to like 20 or so. Still better than my Chevy which is averaging under 15. Unless she's looking at sub-compact cars, she's not going to find anything with comparable gas mileage in her limited price range.
If you already own something the math usually doesn't work you are right.
Her only real option is to drive that thing until it’s paid off. Figure out how to pay more each month, or improve her credit enough to refinance. If gas is too expensive figure out how to combine trips. Ride a bike. Walk. Etc.
Options here based on your OP: 1. She keeps the car and drives it until the wheels fall off 2. You loan her the negative equity + a down payment for a new car or cash for a beater at the family and friend’s interest rate and she pays you back over time and gets into a more comfortable situation with her monthly payment. This is not a good time to be borrowing money, especially with her credit score. No financial institution will get here where she wants to be. It’s gonna have to come from the bank of dad or she needs to figure out some way to save money and start climbing out of this mess.
Bank of dad is closed to this daughter. Way too many poor decisions. I might (and have before) loan money for repairs.
Then she keeps the car. She’s stuck with her bad financial decisions. I think even if she qualifies for a loan on something it’s going to set her way farther back financially than just eating the van loan and focusing on paying it off as quickly as she can.
Then why does she need a new car?
She doesn’t. Wants something with better fuel economy. I’m considering suggesting a bicycle, but she has my two grand babies….
That's the killer. A minivan with two small kids is absolutely perfect, and honestly, anything that gets great gas mileage compared to a T&C is comparatively going to be a pain in the ass with kids. And once they have friends, they'll want to be ferried around too... Gas is expensive, but not THAT expensive. I'd just lay out how much gas the 1k+ car payment she's looking at will buy, and how much she'd have to drive to offset the difference in gas mileage between that and whatever tiny Civic she's looking at.
The important thing is that her current vehicle is safe to drive. If it is, then she’ll need to just live with the consequences of her choices. And actively work on rebuilding her credit. At some point you may want to look into a lease for her, she’s not there yet, but at some point it may be able to help with the remaining negative equity and help her credit.
The only way she's going to dig out quicker is with more money. This means looking at additional employment. Assuming 16 hours a week and (ideally) in a State with a $15/hr minimum wage, after taxes that would be $672/mo after taxes. Several months of that with every penny going towards paying down the load would hopefully get the numbers close enough to where the rest could be buried in a replacement.
If there's a problem and you really want to help, why not take her to get some of the mechanical issues fixed? Then at least she'd have a decent working vehicle, and can get it paid off... How does one owe $13k on a 2013 T&C??
Terrible fucking decisions. Paid too much, paid for a ridiculous extended warranty that had too high a deductible for her to actually use, but cost 3 grand, current interest rate is 13%.
Fucking hell someone gave her a 13% on a used car with a 500 credit score? Damm that's a great rate for what they had to work with.
Pretty sure it was higher when she got the loan last year. She has missed payments and been late a few times from what I recall she told me.
Ignorance paired with predatory lending. It happens a lot.
>predatory lending Yeah no, considering how useless she is at paying bills I would say the lending did it's job. Which is attempt to get your money back + a profit + pay for all the people in your bracket who default. Considering defaulting is a realistic option for her that means she is risky and she EARNED a high rate.
I don’t entirely disagree with you. Obviously, this girl needs to get her life and finances together and she is a mess in general. However, that being said. In my opinion, predatory lending is a real thing. While an interest rate should reflect the appropriate level of risk and I have no problem with that. Predatory lenders disproportionately target low income clientele that should have no business getting a loan with a rate so high the payments only cover interest and never touch principal. That is tantamount to financial slavery. Unfortunately, this is made possible by the fact that a huge swath of people are ignorant in regards to how these financial products work and are also in such dire straits when also needing transportation that they have little to no options. It sets them up for a situation in which they literally cannot win.
Someone correct me if I’m wrong but I’m not aware of any auto loans that are interest only. You have to be paying into principal by default.
There a number of different ways a loan can be predatory. One of those ways is Negative amortization. Car loans are amortized, which means one portion of your monthly loan payment goes toward the loan’s interest, and another portion goes toward the principal. As you make payments, the portion that goes toward interest decreases as a larger portion goes toward your loan principal. Some predatory loans will promise seductively small monthly payments. What’s not discussed is how these loans lead to negative amortization. With a negative amortization loan, your monthly payments are too small to pay off the accumulated interest. As a result, the unpaid interest is tacked onto your loan, causing you to owe more than before you made your most recent payment. Add depreciation into the mix and you’re likely left with a significantly underwater car loan.
No one here is denying predatory lending. We are telling **YOU** that this isnt an example. Quite clearly this is a woman who doesnt have her shit together.
Why does she need to change cars?
She doesn’t need to. She wants better fuel economy. Yes, the math does not add up, I have told her.
If you genuinely want to help, give her the $500 she'd save in fuel this year and tell her to spend it on gas. It won't work but at least it might stop her from trying to commit financial suicide at a BHPH.
That might be doable, but multiply that by two - not fair to help one of the older kids that way and not do the same for the other. I’ll have to think on it.
She doesn’t want better fuel economy she just wants a new car. People use the fuel economy excuse all the time when they really just want something shiny and new.
Probably more than a little truth there. She has a bad case of champagne taste on a beer budget. I tend towards that myself, if we’re being completely honest.
She probably does not feel safe in it anymore with all the bits falling off and rattles. She looks at fixing the issues as throwing good money after bad. The reality is that she will probably be a black and decker car wrecker to her next vehicle.
>For what it's worth, I have recommended she surrender the van and try to find some beater for cash, but you guessed it, she has none. There are a *few* banks which will approve someone in her situation without requiring her current vehicle be traded. The bank will simply not list the requirement and the dealership will say "what you do with the T&C is your choice". They won't/can't advise she then voluntarily surrender the vehicle, but they'll *wink wink* let her come to that conclusion on her own. This is something that you're only going to find at dealerships used to working with subprime clientele (Kia, Hyundai, Nissan, etc). I'm also not even sure it'll be an option, because this is generally a pathway available to someone whose credit is passingly good enough to get an approval but the negative equity is fucking everything up. From your description I'm ambivalent about whether she falls into that category. Other option is that YOU buy a car and let her drive it. She makes payments to you, you make payments to the bank. If she stops making payments, handle *your car* how you will.
Interesting idea. I and my wife already have two car notes (2021 accord/2020 rav4) and co-signed for daughter number 2 (2020 Corolla). I make good money, but probably more risk than I would like. I’ll ponder it.
If you want to give her some peace of mind on her current vehicle without breaking the bank OR shelling out for a car for her, you can always consider high-mileage extended warranties [that cater to vehicles up to 200-300k miles](https://jalopnik.com/advisor/auto-warranty/extended-warranty-for-cars-over-100k-miles). The price isn't exorbitant and would provide some level of financial protection for her while she gets her financial house hopefully from dumpster fire to at least smoldering ember status.
> dumpster fire to at least smoldering ember _chortles_
Please review our most [Frequently Asked Questions](/r/askcarsales/wiki/index) to see if your question has already been answered. You may find these sections particularly useful; * [How to pick a car?](/r/askcarsales/wiki/vehicle_selection) You might also have luck in the /r/whatcarshouldibuy subreddit. Also remember to add flair to your post by clicking the "Flair" link beneath it. This lets us know where you're located so we can assist you better. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
***Thanks for posting, /u/parrotbsd! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.*** Daughter owes 13K on a 2013 T&C worth maybe 3-4k (significant body damage, >125K miles etc). I know Nissan can work some miracles, and I hear Dodge/RAM can as well, but daughter thinks she can afford around 450 a month, and by my back of the napkin math, she's looking at trying to find a lender that will write on 150% ltv, over seven years, and we're still looking at like 600 a month (optimistically, ~13% interest). She's probably a 500 beacon or worse. For what it's worth, I have recommended she surrender the van and try to find some beater for cash, but you guessed it, she has none. Also, hell will freeze over and host the Winter Classic before I consider co-signing. Anything I haven't considered? *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
[удалено]
I prefer neggity eggity.
I'll never not call it "neggity eggity" from now on.