Author Topic: Financed a car - returning it - any helpful advice?  (Read 1729 times)

24forMore

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Financed a car - returning it - any helpful advice?
« on: February 15, 2020, 01:22:00 PM »
Hi everybody,

My girlfriend financed a 2015 Kia Sportage. She has paid about $6,500 on it, but still owes about $9,000 on it. This financing started in 2018 and is supposed to end in 2023. She has two payments a month of $124. The Kelley Blue Book price of this vehicle is $7,298 - $8,403.

She's tired of these payments and wants to get a used car. Here is what I've gotten from the research I've done.

1) She can go back to her car dealer and turn back in the car, but will they offer her even close to the Kelly Blue Book price?
Example Scenario: If we go with this option, she would return the car and receive $7,000. Then she'd use money to bring the $9,000 she still owes down to $2,000? So now she owe's $2,000 and has to purchase a used vehicle. So she'd owe $2,000, then pay another $3,000 for a used car. So she'd be cutting down her payment from $9,000 to $5,000 (the $2,000 remaining payment + $3,000 used car). Did I play this scenario out right in my head.

2) Refinancing. We definitely won't do this.

3) We could sell the car via other marketplaces and then run a similar plan to option #1.

4) Sell the car and loan. Probably won't happen.

Any tips or advice for how to get rid of this financial burden? Any tips from those who have gone through this process?

Thanks everybody.




JAYSLOL

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Re: Financed a car - returning it - any helpful advice?
« Reply #1 on: February 15, 2020, 09:38:44 PM »
I wouldnít let the dealer/finance company know you/she plan to get a cheaper car, they will automatically want to give you as little as possible and roll the rest into payments on a cheaper car.  I had a work colleague that had a 3 year old F150 he was significantly underwater on and couldnít afford the payments, he was able to call up the finance company and explain his situation, and they let him surrender the truck without paying the difference in value as long as he was caught up on his payments.  I canít guarantee that will work for you, but itís worth a shot.  As the finance company sees it, itís cheaper to take a small loss now while payments are up to date than to take a much bigger loss after months of missed payments and an expensive repo bill if the car has become unaffordable.  So Iíd make them think those are their options. 

celerystalks

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Re: Financed a car - returning it - any helpful advice?
« Reply #2 on: February 16, 2020, 04:57:17 AM »
Any $3,000 used car is likely to be older than a 2015 and/or have higher miles than the car she has now, and therefore it will likely have higher maintenance bills. I doubt sheíd end up saving all that much after this is taken into account. 

24forMore

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Re: Financed a car - returning it - any helpful advice?
« Reply #3 on: February 16, 2020, 07:15:33 AM »
I wouldnít let the dealer/finance company know you/she plan to get a cheaper car, they will automatically want to give you as little as possible and roll the rest into payments on a cheaper car.  I had a work colleague that had a 3 year old F150 he was significantly underwater on and couldnít afford the payments, he was able to call up the finance company and explain his situation, and they let him surrender the truck without paying the difference in value as long as he was caught up on his payments.  I canít guarantee that will work for you, but itís worth a shot.  As the finance company sees it, itís cheaper to take a small loss now while payments are up to date than to take a much bigger loss after months of missed payments and an expensive repo bill if the car has become unaffordable.  So Iíd make them think those are their options.

Thank for the insight. She's completely up to date on payments, but we'll paint a more grim picture and have them think that they might be having to repo the car in the future. Very helpful, thank you.
Any $3,000 used car is likely to be older than a 2015 and/or have higher miles than the car she has now, and therefore it will likely have higher maintenance bills. I doubt sheíd end up saving all that much after this is taken into account. 

I'll mention this to her, she is thinking about a 2010 Toyota Prius which I think is a great idea financially...would you reconsider this option if we found a used Prius with under 100,000 miles on it?

kpd905

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Re: Financed a car - returning it - any helpful advice?
« Reply #4 on: February 16, 2020, 07:34:32 AM »
She's tired of these payments and wants to get a used car.

She is already driving a used car.  She took the biggest hit of depreciation already, now I'd just keep the car for another 5-7 years.
« Last Edit: February 16, 2020, 08:05:20 AM by kpd905 »

v8rx7guy

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Re: Financed a car - returning it - any helpful advice?
« Reply #5 on: February 16, 2020, 07:53:45 AM »
Keep the car.  If she wants the loan gone, she should pay it off early.  What kind of breathing room does she have in her budget?  Can she cut her lifestyle down and find $1000 extra?  Can she pick up more hours or a 2nd job?  This loan could be gone in no time and she could have a nice reliable newer vehicle.
« Last Edit: February 16, 2020, 08:22:33 AM by v8rx7guy »

PMG

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Re: Financed a car - returning it - any helpful advice?
« Reply #6 on: February 16, 2020, 08:13:54 AM »
Iím sure the market varies by location but right now a 2010 Prius with about 100k miles runs right around 8k-10k. Add in taxes, tags, fees and the loss sheíd take on the Kia and I might be inclined to stick with the Kia.

eta:

I felt inclined to reply because I wanted a Prius for quite a few years.  For many reasons, including being environmentally responsible and for great gas mileage.  When it was actually time for me to car shop I went out looking for used Prius (with a Camry Hybrid as back up).  I wanted something late model, in good shape and was prepared to spend around $13k.  All the Prius I found in that range had 70K miles or so on them. Or were older than I wanted.  Should I spend 13K on a 2010 Prius with 70K miles,? or 13K on a 2018 Yaris with 6k miles?  The Prius is advertised to have 51/48 mpg, but what I saw about actual mpg as they aged showed decrease, though I don't remember exact numbers.  We ended up picking the Yaris.  We average 42.5 mpg and hope to get 15 years out of it.

Now, that's my story and it has nothing to do with a Kia Sportage, or being underwater on a loan.  But I had bought into the idea that a Prius was a great frugal and responsible car and obviously the right choice for me... only to have to reexamine it.
« Last Edit: February 16, 2020, 08:48:34 AM by PMG »

JAYSLOL

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Re: Financed a car - returning it - any helpful advice?
« Reply #7 on: February 16, 2020, 08:36:11 AM »
As someone who has worked for Toyota and owned many Toyotaís, as well as recently owned the used Hyundai equivalent of her Kia SUV (same car made in the same factory, although mine is older), a switch to a Prius wonít save much upfront (if anything), however, the Prius (even 5 years older than the Kia) will absolutely outlast it, and cost much less to run and maintain over the next decade.  It will also depreciate more slowly than the Kia, even when both older and used.  I own the 2006 Hyundai version, and bought it when it was 7 years old, I have meticulously maintained its cosmetic appearance as well as kept up with all mechanical maintenance and it went from being worth ~$7.5k to being worth ~$2.5k 7 years later, while if I had bought a $7.5k Prius at the time and put the same mileage and care into it, itíd be worth at least $5k today.  Still, there are worse cars to be stuck in than a Sportage, itís not a bad little SUV as far as SUVs go.  Having a reliable, efficient car is one part of getting ahead, the other (and sometimes much bigger part) is driving less.

lutorm

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Re: Financed a car - returning it - any helpful advice?
« Reply #8 on: February 16, 2020, 10:44:49 AM »
My girlfriend financed a 2015 Kia Sportage. She has paid about $6,500 on it, but still owes about $9,000 on it. This financing started in 2018 and is supposed to end in 2023.
I'm having trouble understanding exactly what the situation is here. She financed the 3-year old used car in 2018 for $15500 (plus down payment)?

You don't say how much she drives, so we can't estimate how much a Prius would save in running cost. As the owner of a 2010 Prius that we've had since 2012 without any service except oil changes and a couple recalls, I wholeheartedly endorse owning one. However, if she dumps this car now, she'll take almost a year's worth of payments from being underwater, plus lose a bunch in transaction costs (sales tax on new car, etc), and she'll go from a 5 year old car to a 10 year old one, which will mean increased maintenance. When getting a 10-year old used car, there's always the chance of getting one that has some issue that will need to be fixed.

I guess I'm not convinced that dumping it is a winning move, unless she really can't make the payments. The time to consider what kind and how old car to get was before getting the loan. Now there's a chunk of sunk costs and getting out will incur more. My inclination would be to keep the car and drive it into the ground.

cchrissyy

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Re: Financed a car - returning it - any helpful advice?
« Reply #9 on: February 16, 2020, 12:22:14 PM »
She already has a used car.

She should keep it and pay it down.

If she was going to sell, you want option 3, private sale or carmax, not 1, the dealer she bought it from. They'll have the worst price plus it will be tied to buying something from their lot. Even if you were going to buy another used car you'd want to consider the whole marketplace, especially private party sales, not just this one dealer's selection and retail pricing.

celerystalks

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Re: Financed a car - returning it - any helpful advice?
« Reply #10 on: February 16, 2020, 12:41:18 PM »

I'll mention this to her, she is thinking about a 2010 Toyota Prius which I think is a great idea financially...would you reconsider this option if we found a used Prius with under 100,000 miles on it?

I doubt that you will find one with under 100k miles for 3k. Good luck though.

I had a 2009 Prius. Received it with 140k or so miles on it. I was always terrified the battery array would die while I was out. It is horribly inconvenient to have it die, and once the warranty runs out on the array it costs at least 5-6k for a new one. If you buy one with just under 100k you will have maybe 1-2k miles of warranty left and then all the risk is on the owner.

True story. My brother also had a Prius and the battery array died while he was away from home.  Without warning, the car basically becomes bricked until it is towed to a Toyota dealer so they could put in a new array. It takes about a week to have it fixed.. The car wonít even drive on the engine in a restricted safe mode or anything so you can get home and deal with it at a better time. Luckily he was just inside the warranty period for the battery, and the dealer replaced it. Still a pain in the neck though.

Other gripes about the Prius...

The car is cold in the winter since the heat doesnít really turn on until the engine starts ó maybe they fixed this with an electric heater or something in later models. But it would likely still be a problem in a 2010 Prius.

The gadget-knob-thingy for selecting the driving mode is weird, and in it didnít light up. So I was always fumbling with it in the dark.

The computer mode to monitor the energy direction ó battery, engine, regenerative braking, etc.ó  in the car is just dumb IMO.  Its an interesting gimmick. But seriously, who cares. Its basically a useless distraction.

The engine compartment is a nightmare... Ask anyone who has tried to replace a Prius headlamp bulb themselves. Seriously, you are better off bringing it to the dealer for this.

By and large I donít think it does much of anything for the environment to get one, and It doesnít save much on gas for most people.  It gets maybe 5mpg better milage than a corolla, costs a ton more, and is very expensive to have fixed when it breaks.
« Last Edit: February 16, 2020, 12:48:33 PM by celerystalks »

Sibley

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Re: Financed a car - returning it - any helpful advice?
« Reply #11 on: February 17, 2020, 08:29:40 AM »
Your GF is trying to solve a problem. To her, the problem is the car payments. However, her solution(s) right now all involve car payments.

The only solution to the problem of car payments is getting rid of car payments. The quickest, easiest path to that is to pay off the loan. She's paying $124 twice a month, or $248 monthly. If she could double her payments, that would greatly accelerate the pay off. If the interest rate is really high, such that refinancing could reduce the rate to such an extent that even with fees it would be a net savings, that might further accelerate payoff.

However, that all presumes that the problem is the car payments. If the problem really is that she doesn't really want the Kia any longer and the payments are just adding annoyance, then that's a different set of potential solutions, and that's the set you've listed. So, first, you need to define the problem. Then, figure out the potential solutions.

Bernard

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Re: Financed a car - returning it - any helpful advice?
« Reply #12 on: February 17, 2020, 04:47:39 PM »
I'm all for saving money on cars, but unless she has a great deal on a $3,5K car from grandma in the wings, continuing to drive her Kia seems to be the most sensible solution.

A Prius is a complicated animal with 2 engines and a computer system that regulates their co-dependency. And on top of it there's a battery pack costing as much as a complete Kia:

https://youtu.be/qDAphEzYAzM

theoverlook

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Re: Financed a car - returning it - any helpful advice?
« Reply #13 on: February 18, 2020, 07:14:27 AM »
What is the interest rate on her loan?

Basically at this point she has a known quantity 2015 car and a $9000 loan. You can not sell the car without paying off the loan. $9000 is not a ridiculous amount to spend on a 2015 Sportage. She needs a car, right? The best option at this point may be to either pay off the existing loan or refinance into a lower rate and pay off that loan. That depends on what the current interest rate is.

I would not drive a $3000 car unless you know how to work on cars. I have spent decades driving $3000 cars, and if I was paying someone to do all the repairs I've done, I would have spent way more than driving a newer car that didn't need those repairs. Also, you can't get a $3000 car without first paying off the loan, and so you'll end up spending way more than $3000 to end up with a car that's only worth $3000. There's just no way around the loan she has; the only way out is through.

therethere

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Re: Financed a car - returning it - any helpful advice?
« Reply #14 on: February 18, 2020, 08:41:57 AM »
Options 3/4 aren't even possible if you can't come up with the difference in between the loan and the what you sell the car for. So unless she's got 1-2k in cash it's a no go. Not to mention, selling a car with a lien on it via craigslist is a big drag. There aren't many buyers willing to hand over money for a car and then put trust in someone that they'll pay off the loan in full and handover the title. Buyers who would do that would expect a lower price for the car simply for the hassle.

Stick with the car and slowly add extra payments every month at least until the loan is lower than the KBB.

slappy

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Re: Financed a car - returning it - any helpful advice?
« Reply #15 on: February 19, 2020, 03:21:02 PM »
Like someone else said, I don't really understand the question. Why does she want to get rid of the car? Because she doesn't like the payment? Then she should work to pay it off early.

blingwrx

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Re: Financed a car - returning it - any helpful advice?
« Reply #16 on: February 20, 2020, 09:20:59 PM »
Keep the Kia if itís driving fine and has no issues. Youíll save on maintenance in the long run with the newer car. Your also unlikely to find a good Prius for 3k. Even if you do you run high risk of problems as you donít know if previous owners crashed it, if it has hidden mechanical issues, electrical issues, water damage or what not. I owned 10 used cars in my lifetime and a good amount of them had issues youíd find later on. Iím very mechanically inclined and worked on the cars myself. I would totally not recommend a 3k car to someone who didnít know cars, they can be a money pit.