My girlfriend just financed her first vehicle. The balance on the note is about $20,000. Her credit score is in the ballpark of 550 and her debt outside of the vehicle is at $ 8079. On top of all of that. The dealership allowed her to pay her down payment in installments. She still owes them $1350 for that balance, and still has the tag issue which I believe is anywhere from $750-$1000. The vehicle is terrible on gas (about 15 mpg), and the KBB value is $10,000-$12000. Its just going to be difficult for her to keep her head above water with it. She is obviously going to be broke for the near future trying to catch up on the vehicle alone. She makes about $1750 a month. Now, this is my question, should she request some mercy from the dealership on the balance they are owed. Best case scenario, she gives them $500 a month. Doubt they will be pleased with that offer. But hypothetically speaking, if they would agree to give her some more time on the down payment, would you suggest sticking it out and her being upside down in a high millage, gas guzzling, over priced vehicle. Or do you suggest she take it back to the dealership and perform a voluntary repossession? Obviously she is terrified of the repo and what it will do to her for the next 7 years, but at the same time, this vehicle is going to cripple her available funds. Thank you for any advice you can provide. It is greatly appreciated.

She signed a legal contract and she owes them everything she agreed to. They have absolutely no incentive to cut her any breaks. And with a credit score as low as hers... with a repo (if it goes there) or any other negative report its unlikely she will get a loan from anyone else because her score will drop even lower..

YOU can always ask... but it would be unreasonible to expect them to agree to anything against their best interests. If her credit score would have been better she would have likely gotten a better deal because the dealer or bank (whomever is underwriting the financing this) would have much less risk assumed in the transaction. This is what happens when bills are not paid on time or someone overextends themselves with credit.

Don't mean to sound harsh... but I've been there myself... and learned that lesson the hard way a few decades ago... and also know a dealer VERY well who self financed the people who didn't take financial obligations seriously and what they would do... and how they had to inflate fees to cover the costs of the much higher risk. Before you consider calling them vultures... these are people no bank or credit union would loan a dime to because of the high risk of default.

I recommend she
#1make sure ALL bills are paid on time
#2 make sure this is paid on time.
#3. not buy anything else on credit for some time..
#4. identify and cut any unneeded expeditures (meaning things she wants... but doesn't absolutely NEED)
#5. par down as much of that debt as possible as well... if taking a second part time job would help do it.

Do those things she will bring up her credit score... after she does that she could refinance this with a bank to something with lower rates and shorter term from a bank or credit union.
And last but not least... if you need to stretch out payments beyond 4 years for a NEW vehicle... you need to be looking for a less expensive vehicle. If it's a used vehicle... you really need to find a less expensive vehicle...

None of these are easy... but there is no easy way to dig herself out of the hole she's in... and its imperative to not continue digging it even deeper.

By no means do I expect the dealership to cut her any break. I don't need you to talk to me as a child sir. She had a string of misfortune just like anyone susceptible to. Less than a week from the purchase, her income was cut by a third thanks to a layoff that she had no idea was coming. We both realize that she made a bad decision. Hints why I am posting this question on just about every site I can find. I'm simply asking if climbing out of this financial hole and being upside down in the vehicle is a better decision then the repossession. Thank you

Okay, I can work with that. Thank you for the advice.

Okay, I can work with that. Thank you for the advice.



Like I said... been there myself. (so I know how hard it can be)... and I have seen it from the perspective of the dealer as well.

The personal lessons I learned going through that were valuable... and to never assume anything will come soon (extra cash... better paying job... winning the lottery.. ec)... you have to assume it will get worse... and no matter what your income at the moment... put a percentage of that in the bank... and always live to a standard below your pay scale... it teaches financial discipline... and helps you get through lean times... which many of us will experience several times in our lives. And I am looking at another one coming soon myself. Maybe I will find a better paying job... maybe I will find one similar... but I have to adjust my spending and lifestyle downward to fit a reduction in income.

I got myself in trouble in the past by asssuming it would not last more than a month or two... and I didn't adjust to suite... when it didn't get better months later I found myself in a very deep hole. It took me years to pay off the bills and get on the right path.

I'd also recommend before she bought any other vehicles in the future... take a mature and very responsible person (if they are financially aware as well even better) to keep entusiasm in check... and as a unbiased person... tell her when something doesn't look good... or looks bad.

I'm guessing she bought something she was excited about and showed it... you HAVE to know what you are willing to spend before you even speak to a saleperson... know what its worth... and be able to walk out the door the minute it stops going your way. Meaning once you get your heart dead set on one car... and show it... then the dealer has you where they want you.

Yeah... I've been burned before as well. It's a dealers job to make as much as they can... and its your job to see he gets as little as you are willing to give them if they want to make a sale to you.

They didn't let her drive away without having a decent enough amount to cover any contingency. I might surrender the car and get good documentation that she did so and isn't going to be sued. Yes, she will have to rebuild her credit. You can help her get around while she finds another job and help her buy her first good cheap used car with cash, like we all did for our first car. Maybe $1200-1500. Private party purchase, with a trip to a diagnostic place to have it checked out. And she can baby it carefully, driving only when absolutely necessary. And rebuild her credit slowly.

Was this a Buy Here-Pay Here dealership or was she financed through a credit institution?

It is POSSIBLE that the dealer would take it back minus some fees if it was a BHPH but it's not likely. If she was financed through an independent financial institution, then she is stuck with the car and payments until it's paid off or repo'd.

There is a lesson to be learned here though... and I'm not preaching... I'm telling you this because I am a dealer... KBB is useful but only if you use it BEFORE you go to buy a car and sign the deal. Telling us now that she agreed to pay $8k over KBB does nobody any good. If she had looked it up before signing the deal, she could have used that as bargaining power to get the deal worked better for her.

I price my cars at NADA values and don't like to go over that. I could charge more but I choose to not try and rip people off. I do financing here for all credit... no credit, bad credit, good credit... Rates are high for bad and no credit but I won't write someone out for a car loan that I think will crush them. I cannot do that and look at myself in the mirror. I simply tell them that I'm sorry, but I can't work a good enough deal for them and send them on their way.

To me, it does no good to sell a way overpriced car to someone that I know will have trouble making the payments. They can have the best intentions in the world but when their payments eat up a huge chunk of what they bring in, I cannot do that to someone.

Why did I tell you this and why does it matter? Because I am an unusual dealer from what everyone tells me. Most dealers don't care. It's about making money only and as much as they can. They will put you in a car that you can't afford and one that is already $5 or $6k over book. They will lie. There are tricks and games to play. Your best defense is to try a few different places before you buy and get an idea of clean retail price from KBB or NADA before you agree to anything.

If the chips are down, let it get repo'd.
Pay cash for everything the next 10 years.