Need advice on what to do with car loan

[linuxguy0481]

My wife and I have a car loan for our 2008 Mazda Tribute. It's just the base model 2.3 liters 4-cylinder engine. We owe $13,500 at 13.75% interest. We got it in July of last year. We have never missed a payment and always been on time. We were surprised that we got it after our bankruptcy was finalized February 2009. Side note: We had to do bankruptcy because of all the medical debt we have acquired over the years.

For some reason our car payment fluctuates every month. When we were at the dealership we agreed on paying $330 a month. But we have gotten statements from $330 to #349. Not sure why.

We want to trade in our current vehicle and exchange it for two vehicles of lesser value. We thought we could make one car work but we can't. We need two cars. We both don't want to go above our current monthly payment.

We are stuck with the car loan. We owe more than its worth.

We are not sure on what to do at this point. Can anyone help?

[bjl584]

I guess it's too late to tell you not to finance a car at 13% interest after a bankruptcy.

How much is the car worth? Do you have any cash on hand to make up the difference?

Your payment is probably being calculated based on accrued interest from a certain date. HELOC loans work like that. On months that have 31 days your payment will be a few dollars more.

You are probably are going to have to look at other areas to make up the difference to get out from this car. Cut expenses, sell stuff, pick up part time work, etc.

When you do get out of the car, buy two cars that you can pay cash for. That's the best advice that I can give you.

[YLTL_Dan]

This is a tough situation and all I can do is echo what Brian said. You absolutely cannot take on a loan with an interest rate that high - obviously it was that high because of your bankruptcy.

You may be able to get a small loan from a credit union to cover the difference between what you owe and what it's worth. If you get two cars, you need to go way down in price... I'm talking two clunkers that aren't pretty but are dependable.

It sounds like you've been through a whole lot, and you're probably pretty beat up. The last thing you need to do is take on more debt...

[FireBal989]

How much longer are you stuck with the loan for ?? My best advice would either be to sell this car and pay off the loan with the cash. Then buy two cheaper cars in cash in order to have the two cars you want, or as an alternative idea, you can stick it out with this loan and this car a little longer, and buy a very cheap car (but reliable of course) just to get around with a second car.

I know you said having two cars is absolutely necessary, and I understand that, that's why I think buying a cheap but reliable car as a second car until your loan is paid off with this one might really help. If you could buy a cheaper car in cash so that you can have two cars until you pay off the duration of the loan, this may really help, best of luck

[dontgopoor]

The other posters seem right on target - it's a tough situation. New cars are usually not a better choice than used, especially when financed, and even more so when financed at such a high rate.

The key seems to be to get out of the high interest loan by either selling the car before the loan is paid off (and paying off the balance with cash in hand, which I'm guessing you don't have or you'd use that money to buy a used car now) or paying the loan off as fast as you can to own the car outright.

At that point you you can try to sell your car and then buy two less expensive cars. I would not go to a dealership and trade because that will be a very expensive process. You'll need to do more work to sell by owner but the process will save you money.

Use the web to research how to sell and buy used cars. Edmunds, Autotrader, and Consumer Reports would be good places to start.

[Joan.of.the.Arch]

Very sorry about the health problems you encountered. Hope those are all better now.

Alternative idea. If you were to move very close to where one of you works or otherwise needs to frequently go, could that person walk while the other takes the single car? Is there any public transportation? Could you move to where you live close to lines?