How do you get out of jail for a crime you committed and have 1000% evidence against you. You don’t, you serve the time. Likewise with this car situation, but less bad, you have 3 options, I’ll you all of them and I’ll tell you which one I would do and which I would not do and why. Truth is though, all these hurt.
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1. Option Number 1: Pay it Off in these ways
- Let's set up the example so we all are on the same page
- I bought a car for $30k, my loan balance is 25k and the car is only worth 20k ( I have 5K in negative equity )
The first way to pay it off is like this:
- Get on a serious budget
- Don’t spend any money
- Work some extra hours
- And use all the extra hours to get the negative equity taken care off
- Once you’ve done that, you sell the car, and boom you are done
A second way to pay off is this:
- Get a loan for 8k from a credit union or whoever will lend you the money at a good rate
- Use 5k to pay off the negative equity, sell the car, and be done with it
- Use the 3k to buy a cheap car
- And now you only have a loan of 8k to worry about ( use option 1 and pay it off fast )
Third way:
- Keep paying normally and be done in 5 years to 7 years
- You’ll end up paying a bunch of interest
- And would have had a massive missed opportunity for redemption
Tip: you have to be fast, and baby the car. To avoid losing more value as you try to pay it off.
2. Option 2: Declare Bankruptcy
- I call this a quick fix with long-term ramifications.
- Sure you get stress-free for your elf today
- But you pass on all that stress to your future self, and you will not thank yourself
For example:
- It's easy to file bankruptcy
- But it will destroy your credibility for buying a home and everything else
- Plus it says a lot about you when things get hard and you just choose to default
Tip: sometimes it makes sense. However it's usually a bad idea.
3. Do a voluntary repossession and hope, the lender doesn’t sue you
- Voluntary repossession, is you forfeiting the car
- But this is not a good idea
- It takes away the little control you have
If the car is worth 20k
- Once you forfeit it, they’ll probably auction it out, and then it can sell for 13k
- Then now you owe 13k-25k = 12k instead of just 5k you see
- Because you can't control the price they sell it
For next time
People don’t look at the price, they look at the monthly payment
⁃ Look at the price and value with my time
⁃ Someone sent me a 40,000 car yesterday and calculated it at $8 an hour ( it was 5000 hours of my life, 1 year, and 7 months of work for a car )
⁃ I can’t of it when I can instead invest it, make $4,000 extra dollar a year from profit and use that money to buy a beater
Remember when you make a mistake and the fix hurts, you tend to remember that
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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.
20 авг 2024
