| ChromeDragon |
I'm not talking about rolling your car; I'm talking about ending up upside down on your vehicle's value. Basically you end up owing more than the vehicle is worth. The problem is being exaccerbated by leasing programs, 0% financing rates and financing periods reaching as long as 84 months. Over the past decade or so this has become a more and more prevalent problem with new vehicle purchases. People are often buying vehicles that they aren't able to realistically afford and they get in way over their heads.
Basically I'm hoping to find out about some specific cases, if you guys know anyone who has been upside down or have been upside down yourselves, I'd like to hear about it.
Thanks!
Matt
P.S. You can get upside down on used vehicles also |
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| oldraven |
I payed double what my car was worth, if in mint condition, (which it wasn't), and that was after getting the price choped down for defects. I didn't realise that until a few months after I bought it though.
Daewoo dealer in Wetaskewin. Fuckin Bullshit, cars cost less. |
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| madx |
| when ever you buy a new car no matter WHAT BRAND. and you finance it with 0 down. then you will always be upside down at least for the first couple of years; if not more with other makes. Like *cough* ford *cough* chrysler* cough* dodge*cough..... |
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| redbaron303 |
We wouldn't have been, if we hadn't miled out the Acura.... but w/ nearly 250 000km at the end of a ~96 000km lease, it kind of sucks when they give you below value for the car and you ahve to pay for KM.... it turned out it was cheaper for us to buy it off lease and own it than it was to return it to the dealer and take a new one :P
The lease rates were good, so was the down payment, payments, and the residule value was perfect.... but what we didn't take into consideration was the KM useage and we got fucked in the end b/c we enjoyed driving our car on average more than 2000km/month. Oh well, I guess this isn't quite what you mean by your post Matt but we still owed more than it was worth to anyone at the end of the term regardless. |
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| SilverZ24 |
IMO you shouldn't be allowed to buy a car unless you have 25% down. That may not guarantee you will never owe more than the car is worth, but you will be in much better shape if something happens like you lose your job and you need to dump the car.
And I agree leasing is the worst because it gets a lot of people into driving something they can't actually afford.
And then I have seen many people that want to get out of their leases, but because they are in the hole about 3 grand, the only thing they can do, is trade in the car on another car and the dealership works the "negative 3 grand" deposit into the payments.
If Alberta's job market ever takes a turn for the worse, there will be a ton of bankrupt people.
Either way, that is off topic, but as an example, it did happen to my brother, and he ended up leasing a new car (same mistake) and the 2 grand he was in the hole on the old car ended up on his line of credit. So for about 6 months he was still technically making payments on his old car and the new car. |
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| Insomniac |
| This happens a lot with vehicles that have high depreciation. Look for somebody financing a Hyundai, Kia, Aztek, or Mitsubishi. |
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| TrevorK |
quote:
Originally posted by SilverZ24
If Alberta's job market ever takes a turn for the worse, there will be a ton of bankrupt people.
I think that their house/condo they can't afford will contribute to that quite a bit too :)
My buddy's gf is upside down - she owes over 18K on a three year old car that cost 20K new because the dealer added in all the worthless options (mats, undercoating, etc...) and gave her a high interest rate. She just didn't know any better.... |
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| DeathBy240 |
| My GF has been upside down in my car...:bthumbup: |
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| ChromeDragon |
quote:
Originally posted by DeathBy240
My GF has been upside down in my car...:bthumbup:
Mine too.:bthumbup: |
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| Inzane |
Biggest factors (assuming financing):
- depreciation
- size of your downpayment
My wife and I both had car payments that overlapped. She was 5 years on a '99 Sunfire, I was 4 years on a '01 Sentra SE. If I recall correctly she was upside down on her car for probably the first 3-3.5 of those 5 years. Whereas I was never upside down on the Sentra at all the whole time (I was also never upside down on my '96 Integra, '96 Prelude SR-V, or my 300ZXTT).
The eventual demise of wife's Sunfire (recent accident) was the value of repairs exceeding the residual value of the car, hence write-off. It was only 5.5 years old and didn't even LOOK that bad.
My conclusion:
- Sunfires (as are most GMs) are junk... and their value reflects that.
- There won't be any more domestic vehicles in my household, especially GMs.
- all cars depreciate. Its just a matter of how much of a hit do you want to take. Choose wisely. |
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| SilverZ24 |
quote:
Originally posted by TrevorK
I think that their house/condo they can't afford will contribute to that quite a bit too :)
But stretching yourself a bit on a house/condo isn't nearly as bad. You typically always have equity and if you were forced to sell you could easily downgrade. |
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| SilverNeonRacer |
| My wife started in the hole, she traded a 2000 Dakota(Said it had negitive equity as well like $7,000) For a 2001 Neon, they couldn't get her the 2001 so they gave her a 2002 for the "same cost" of an 01. So On a sticker price of $25000 or so, plus protection package they gave her fleet pricing on, her loan ended up being for $33500. Last spring I think Travis @ apex had a hard time selling his 02 R/T with low miles, mint condition(minor issue with front bumper, he was providing the seller with a new bumper) for $12,000. Plus my wife had 9.9% or 8.5% I think, payments are $495/mo and I think a 7yr term $41xxx is what she'll pay back. my car was 352.01/mo for 7yrs I think.. I found out afterwards it was a friggen balloon loan, and I told them i didn't want that. |
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| lowryder99 |
quote:
Originally posted by ChromeDragon
Mine too.:bthumbup:
Your girlfriend has been upside down in Deathby240's car.....
Sure you should be bragging about that?? :dunno:
LOL...j.k dude, saw it and had to catch you on it:bthumbup: |
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| redbaron303 |
quote:
Originally posted by SilverZ24
And I agree leasing is the worst because it gets a lot of people into driving something they can't actually afford.
Leasing a vehicle isn't always bad, if you're flipping cars frequently it seems to be a reasonable option.... Although I'm not sure which would be better on high end cars (BMW, Mercedes) where you only drive them for one to two years maximum - buy it for the year & sell it, or lease it and just get a new one at the end of the short term? I know a couple of people that like to get new 7 series BMW's every year and they juts short term lease the one they're in.
But I agree, that a substantial deposit should be put down so the buyer doesn't get too screwed IF something so should happen! |
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| beatshack |
| i have always bought cars with 1 payment (saved cash).. this is and will always be the best way to go about it.. i think the best way to get your moneys worth is buy used, and buy japanese/european.. they seem to hold thier value much better than domestic stuff. ;) |
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| ChromeDragon |
quote:
Originally posted by redbaron303
Leasing a vehicle isn't always bad, if you're flipping cars frequently it seems to be a reasonable option.... Although I'm not sure which would be better on high end cars (BMW, Mercedes) where you only drive them for one to two years maximum - buy it for the year & sell it, or lease it and just get a new one at the end of the short term? I know a couple of people that like to get new 7 series BMW's every year and they juts short term lease the one they're in.
But I agree, that a substantial deposit should be put down so the buyer doesn't get too screwed IF something so should happen!
It was actually a rush on leasing in the mid 90s that began this trend. The amount of leases created a surge in the number of lease return vehicles subsequently flooding the used car market and causing values of used later model vehicles to drop substantially. This made it so that people attempting to trade in their couple-year-old vehicle had to take a more significant loss than in the past and leaving them upside down on their vehicle for a longer period.
The problem has gotten so bad in the states that some people have actually remortgaged their homes for 35 years and taken extensions on the original loan to purchase new vehicles. Essentially these people are buying a car that will last them a few years, but they are still paying for it three decades down the road. The other interesting difference between Canada and the states is that in Canada only 66% of the population of driving age own vehicles. In the states, that number is 110%. That means that there are more licensed vehicles on the road than drivers. Pretty screwed up huh?
Sadly, the trend points to Canada heading towards those longer term loans. On the plus side is that Canadians, for the most part, if they can't afford a vehicle, they don't buy one. |
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| SilverZ24 |
quote:
Originally posted by redbaron303
Leasing a vehicle isn't always bad, if you're flipping cars frequently it seems to be a reasonable option.... Although I'm not sure which would be better on high end cars (BMW, Mercedes) where you only drive them for one to two years maximum - buy it for the year & sell it, or lease it and just get a new one at the end of the short term? I know a couple of people that like to get new 7 series BMW's every year and they juts short term lease the one they're in.
I wouldn't think too many people buying those cars are leasing. My boss buys about 2 new 100 grand or so cars a year and they are always paid for in full. His opinion (and I think lots of people with money) is that he never wants to owe anyone a single penny. If you have the cash why not. There are lots of people that are just like to pretend they belong in a certain lifestyle.
Someone I know that works at a bank says that usually the people that are the showiest with money and cars usually have a ton of loans and don't really have that much money. The people that actually have money are a little more humble. |
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| redbaron303 |
| You guys make very good & valid points.... this is why I stick with under $20k cars, used.... b/c I don't have enough cash to drop on a $100k car and think it's stupid to lease it. I think being THAT much in debt for A car is ridiculous... |
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| ChromeDragon |
| That situation with your TL was an interesting one Chris. I suppose that's another issue that could be worth exploring, lease terms and buyouts. |
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| redbaron303 |
Yeah.
When the lease came time we were pretty shocked to find out the residule value of the vehicle wasn't much more than the "over KM" useage fee (I'm not sure the technical term for that). In all honesty it was pretty much cheaper to buy it out than pay for the KM's.... |
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| ChromeDragon |
| Well most dealers charge $0.10 per km do they not?:dunno: |
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| SilverZ24 |
| Well they do that on purpose because the last thing they want is the car on their lot with that many km's. They would rather you buy it and try to sell it than them. Selling a car with that many km's isn't easy. |
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| Insomniac |
| A lease is a well defined contract. Surely baron's family knew what they were doing when they were piling on the miles. |
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| redbaron303 |
quote:
Originally posted by Insomniac
A lease is a well defined contract. Surely baron's family knew what they were doing when they were piling on the miles.
I have to say, my pops understands contracts very well. This came as no surprise to us the additional charge/KM over alloted amount... what was more of a surprise was that we managed to accumulate SOOOOOOO many KM on a brand new car (we picked it up w/ like 0.7KM on the odometer)... we're still trying to figure that one out, 300 000km later (just about)! But needless to say our love of driving bit us in the ass this round. We had leased a few vehicles before for my dad's office and had hardly even hit 90 000km in 5 years which is why we leased the Acura! Didn't think there'd be any problems... who knew?
quote:
Well they do that on purpose because the last thing they want is the car on their lot with that many km's. They would rather you buy it and try to sell it than them. Selling a car with that many km's isn't easy.
This is exactly right! |
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| ChromeDragon |
| So six people have responded yes to this, would any of them be interested in sharing their stories? I can't believe how hard it has been to find someone willing to tell their story to help others avoid the same situation.:dunno: |
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| SilverNeonRacer |
quote:
Originally posted by ChromeDragon
So six people have responded yes to this, would any of them be interested in sharing their stories? I can't believe how hard it has been to find someone willing to tell their story to help others avoid the same situation.:dunno:
How do you mean tell their stories? The only way somebody can not be upside down is to start ahead, pay less than what the car is worth on a vehicle with low depreciation.
Say with a Neon or Cavalier, or Sunfire.. Say you put 5G down in 2yrs, you probably still owe more than what the car is worth.
Me and my Wife, she started with a 96Cavalier, pretty much paid it off, but it started to break down so in 99 or 2000 she traded it in on a 2000 Dakota, a $33,000 or 35,000 Truck, I don't know if she had negitiv equity on the car or not. She had the Truck for 2 yrs, didn't have a down payment, other than the trade-in.
The cost of running the truck got to high, between $500 payments and $350 for insurance and fuel for the beast, it got a little over whelming. So she traded it in on a 02 Neon R/T, She was trying for the last black 01 in Canada but the dealership that had it wouldn't send it over.
So after 2mo of waiting they gave her a 02 straight off the truck, since we got screwed on the protection package on the truck(the under coat came off if you flicked it with your finger. The dealership that did it said it was a sound deadner not a rust/stone protector) The gave her 25% off the protection package.
So with the negitive equity on her truck, cause they said it was in bad shape, it wasn't really. The 02 with the 01 Sticker price of $24,500 or so the loan was for $33,500. 3.5yrs later She still owes $16,000 on a car that if she really held out she might get $10,000-$12,000 for.
To add to it, some how 1 month after she got her car, we got approved for my 02 Neon LE, with $1000 down. I told them I didn't want a balloon loan, but I found out after they gave me one anyhow. So my wife who was making $1600 net/mo and me making $1200 net/mo and have only been at my job 3 weeks, got approved, even though we had just been approved for her car.
My sticker price was $23,000 or so, but they really wanted to sell me a car, cause they heard I was thinking of a chev, I got my car for $20,995 with Protection package.
Almost 3yrs later I missed 2 payments because I was self employeed and business was slow. The bank sicked a collection agency on me, they called saying they wanted payment now, i said in two weeks I could catch up completely, they said that wasn't soon enough, so I said "where do you want me to drop it off" They said um we'll get back to you. So since they now where contemplating taking the car, I figured why make a payment, they told me it wouldn't help to keep it.
So I did some checking and on my loan they had a choice to sieze or sue, couldn't do both, either hurt my credit about the same. They where leaning towards siezing.
So 3 weeks later i was called by the auction place on 75St just north of Whytemud telling me to drop it off there.. so I called the bank back to confirm.
So ya anyhow.. I dropped the car off, and they hurt my credit, however... according to my credit history now they're saying I still owe them $9000+, I owed $14,xxx, and they old got $4500 for it at auction. So I still need to call them and get them to remove the amount I owe them cause I went to the bank and asked about something else and it popped up that I owe them still. GRRR.
Anyhow.. thats my story.. I have a friends story.. too.. heh he dug a holes and good, lets just say at the end he ended up owing $50,000 on a $32,000 Turbo PT Cruiser. |
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| Insomniac |
let this be a lesson children
:eek:
- don't buy stuff you can't afford
- buy a chrysler (or any domestic for that matter) and lose your shirt! |
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| Jord@n |
| I bought my car for 2500. I'll probably buy something new in less than a year and sell my car for 2500.:dunno: |
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| SilverNeonRacer |
The new vehicle was nice.. I loved having warranty... But I think I'll stick with good used.. the Corolla's heavy used.. but the price was right, I'm sitting back trying to decided what all to do to it/with it, and I'm not sure how much I wanna put into it. Needs a buncha body work, wasn't using oil before.. now it burns a little or something, I see a little seeping out between the head and block. Need a brake master cylinder gasket, but a whole new master cylinder isn't that much.
Anyhow, we still have the one new and will probably drive it til it's atleast paid off, 3more years. Unless I win the lottery or something, then Oh boy do I have plans. |
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| Markgase2000 |
| I been upside down in almost every car you can think of.:bthumbup: :blink: |
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| HEWSINATOR |
So I did some checking and on my loan they had a choice to sieze or sue, couldn't do both, either hurt my credit about the same. They where leaning towards siezing.
So 3 weeks later i was called by the auction place on 75St just north of Whytemud telling me to drop it off there.. so I called the bank back to confirm.
So ya anyhow.. I dropped the car off, and they hurt my credit, however... according to my credit history now they're saying I still owe them $9000+, I owed $14,xxx, and they old got $4500 for it at auction. So I still need to call them and get them to remove the amount I owe them cause I went to the bank and asked about something else and it popped up that I owe them still. GRRR.
Anyhow.. thats my story.. I have a friends story.. too.. heh he dug a holes and good, lets just say at the end he ended up owing $50,000 on a $32,000 Turbo PT Cruiser. [/B][/QUOTE]
They still can sue you to make up the difference, some judges will allow it, some will not, it is pretty much a crap shoot. I know this from being close to the auto finance business. |
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| SilverNeonRacer |
| It's in the fine print of my contract they can sieze or sue, also they bank collection deptarment confirmed it for me, In Alberta they can do either or, not both, but on Onterio they can do both. Mind you if they sue me for the rest I'm gonna counter sue for my car back. Cause that make no sense.. It's not my fault they couldn't get what I owed for the car at auction, also it make no sense that if they come back at me for the 9 almost $10,000 that I would have paid pretty much $24,000 for a car with a loan of $21,000, so they would be out some interest. |
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