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daughter's car loan problems

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ddiane

Guest
What is the name of your state? CA

I am requesting questions for my daughter who is on a car loan with an ex-boyfriend. When they were together she signed the loan because her boyfriend, (at the time) did not have a valid driver's licence and the people at the car lot would not let him drive it off. They broke up and he kept the car, just 6 months ago he got behind on the payments so they called my daughter. She told them she did not even have possesion of the car so they helped her get the car in her possession. But not she has realized that the car is not worth what is still owed on it and it is a high maintenance vehicle with high cost of insurance. Now my daughter wants to do a volunteer repo but the finance company is stalling. How can we handle this? The ex-boyfriend tried to get it re-financed in his name only but could not qualify. He also still doesn't have a valid licence. Now the finance company wants my daughter to give the car back to him and provide insurance for him. Help, any suggestion and advice would be appreciated.
 


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gottago

Guest
She has 2 choices-

1. A repo (even a voluntary one) will ruin her credit. She's going to have trouble buying a home or another car for years to come.

2. Pay off the car and move on. It will be expensive, but at least her credit won't be ruined.

It sounds like you're confused about what the finance company wants. I guarantee you that they do not want her to give the car back to a person who has no driver's license.

How in the world is the boyfriend getting insurance on the car if he has no license? Please don't tell us that your daughter has been insuring a vehicle driven by someone with no license. If you think she has problems now, just wait until the boyfriend gets into an accident with no license.

Don't give the boyfriend the car, and don't let hime drive it. Your daughter's life will become a real mess if the boyfriend hits someone with that car.
 
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ddiane

Guest
Respond to gottago

Thank you for your advice but my daughter cannot afford the payments ($360 per month) anymore and the insurance ($268 per month) and the maintance and the gas on the car. It is a sporty car with a convertible and a V-8 engine. She did not pick out the car, the ex-boyfriend did and it was a type of car for him, I guess, but not for a single parent with a small child. But she was stupid enough at the time to sign the loan. This is really a learning experience for her. Also her credit is already messed up because the boyfriend was about 3 payments behind when she got the car, so that put a ding on her credit and she has made other small bad choices on her credit. So the part about her credit being ruined it not a big deal anymore. She has also thought about filing bankruptcy. And your 2nd option is not good for her because of the info I provided about her situation. This car is a 94 Mustang and they still owe almost $9,000 on it. I think the finance company took a big risk when they approved this loan anyway because the loan was quite a bit more than the car was worth. No, my daughter was not paying insurance for him, when he had the car the finance company was adding on to his payment every month for collision insurance to protect them, but he did not have liability insurance. When my daughter got the car she got full coverage on her self only. I do not think your can get auto insurance in California without a valid license. I do not think the finance company knows the ex-boyfriend does not have a valid license but they will soon. I do agree that he should not have the vehicle, my daughter will not let him have it. But the finance company will not let my daughter do a volunteer re-po without his permission. So what happens if he does not give his approval??? They can not expect her to give to him without a license plus he probably can not make the payments. I know they do not want the car but we are about ready to drive it over to the finance company and say "Here it is, it's yours and here is the key". She just wants to be done with the situation so she can concentrate on raising her child. She does not receive any child support from the father and he is in prison, so it's all on her. The finance company already said that if they get the car back they would sell it at an auction and if they do not get enough from it to cover the loan she would be responsible for the balance. What about him, would he be responsible too??? Would they have to take her to court to make her pay the balance???? I think she could have a good argument in court about the situation because I do believe the finance company approved too much for this car.
 

bigun

Senior Member
The finance company has no recourse against anyone but the person who signed the note. Sounds like that's your daughter. They'll have to sue her in order to get a judgment that would force her to pay. The argument that the note was too high just won't fly. She didn't have to sign a note for any amount.
 
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ddiane

Guest
In reponse to bigun

Thanks for the info, but my daughter is not the only person on the note. The ex-boyfriend signed also. I also disagree with you saying that the note being too high will not fly. If we do some research and could possible prove it, it's worth a try. I do agree, however, that she did not have to sign anything.
 
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gottago

Guest
bigun's right about the size of the loan. The only person to blame for signing a high-cost loan is the person who signed the loan documents. If you agree to borrow $10,000 against a car that's only worth $5,000, you have no one to blame but yourself.

You cannot change your mind after the fact and decide that the car is now worth less than you originally paid for it. The lender already paid the car dealer, and now they want their money back from the person who agreed to repay it.

It sounds like your daugher has learned an expensive lesson. From this point, it can get better or worse, depending on her next choice.

If she allows the car to get repo'ed (or she turns it in), her credit will be ruined for years to come. However, if she gets caught up on the payments, she'll have good credit in a few years when she decides to buy a house or another car.

A 94 Mustang convertible with a v-8 is probably worth around $6-7,000 in California, assuming it's in decent condition. If she only owes $9,000 on it, the difference is $2-3,000.

Is it worth ruining her credit for 7 years over $2-3000?

She should borrow the $2-3000 and sell the car to pay off the loan.
 

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