Used car just took it's last breath

[jerzigurl77]

What is the name of your state? NJ

I purchased a car in 01 from a used dealer. The car was ok at first, but has since become "the money pit". It is financed, and the payments will be done in July of this year. Problem is - the thing croaked. The finance company told me that I can turn it into them and pay the difference after they sold it. They said it'd be a voluntary repossesion. How does that effect my credit? I'm working on clearing my credit to purchase a house in 05. I've tried trading the car in - but it isn't worth what I owe on it!

 

[hexeliebe]

If it's going to be paid for in July then pay the dog off. Even a vol. repossession goes on your credit report as a repossession.

Then, when it's paid for, shoot it and put it out of it's misery.

 

[JETX]

"The finance company told me that I can turn it into them and pay the difference after they sold it. They said it'd be a voluntary repossesion."
*** That is NOT doing you any favors. Simply, they are going to sell the car (on THEIR terms) and apply the funds (less expenses, etc.) to your outstanding balance. And whatever they get (from salvage as you describe the car) will be MUCH less than you can get. And then guess what, you will STILL owe them.

Example: Lets say that you owe them $1000 on the car. You give it back to them and they sell it for $300 (salvage). It costs them $100 to tow and sell it, leaving $200 'profit'. They apply that to the amount you owe.... leaving you with an $800 debt to them.
Or YOU can sell it to the same salvage yard for the same $300, pay them, leaving you with only $700.

"How does that effect my credit?"
*** Terribly. Not only do you owe them the 'deficiency', but you will have a repo on your credit history.

"I'm working on clearing my credit to purchase a house in 05. I've tried trading the car in - but it isn't worth what I owe on it!"
*** Not uncommon. That is called being 'upside down'. And you are going to have to do the same thing as the repo 'plan'.... that is to take a hit on it. Sell it for whatever you can get and then use those funds to pay the car note. You will still owe them, but it will be less than any other way.

Also, the current value of the car is often a result of YOUR actions that might have diminished its value..... things like, door dings, excess mileage, poor maintenance, etc.

 

[smorr]

Gee, it isn't a Cadillac, is it? I had a nightmare Caddy Seville with a rebuilt engine, a computer system in it that didn't work properly and a nearly $5G loan on it! What a fun time I had! Worst part was, I couldn't sell it, couldn't even give the damned thing away since it seemed the whole world knew about the problems with this engine and car except me! I even tried paying a junk yard to take it, but it 'wasn't a car we're interested in'. I couldn't even donate the thing! I finally found a junk yard that took it for nothing after it sat looking very pretty in my driveway for about a year or two.

Anyway - don't let the bank take it back under any circumstances. It will definitely end up on your credit report and if you're trying to make that better, this is NOT the way to do it.

If you can sell it and pay off as much of the loan with it as possible, I'd do that - the rest may have to be paid out of pocket, but at least you're credit will be saved!