Best Approach to Dealing with my $13,000 Negative Equity

Ask the Hackrs
1

Hi all,

I’ve been lurking for awhile and am hoping you fine folks can help point me in the best direction for dealing with my negative equity.

Long story short, my wife and I have made the mistake of rolling negative equity from one car into another over the past few years. We currently have a 2011 Toyota 4runner with 117k miles we pay $452 per month on (car + negative equity) and a 2012 Toyota Camry with 142k miles we pay $295 per month on (also car + NE). So basically we’re paying $747+ per month on just car payments alone due to past mistakes.

I’m concerned having both of our vehicles over 10 years old and both over 100k miles. They’re Toyota, so they should hold up on majority stuff for many more miles. However, it’s the stuff that adds up that I am suspecting we’re about to begin having to deal with (cats, struts, exhausts, etc.) Not to mention that $747 a month on just payments alone is not helping us much right now. Wife is a stay at home mom who works part time evenings to help make ends meet.

Our goal of any move right now would be threefold: lower monthly payment total - even if just by a little, have at least one vehicle that’s low mileage and newer (less problematic) and most importantly - to FINALLY deal with our mistakes and put a plan in place to bring an end to our cycle of negative equity.

Our options seem limited, and I realize the lease market isn’t spectacular right now. I was hoping to somehow trade in both vehicles, roll negative equity into a lease, and buy a beater car like an old civic or camry for our second vehicle (which wouldn’t be driven much). And just bring an end to the cycle in 3 years or whatever the lease term is. My credit is 748 and wife’s is 807. So at least we have that going for us I guess? :face_with_peeking_eye:

The thing is, any new vehicle in getting rid of the two we currently have would need to be large enough to serve as our family vehicle (road trips, kid’s soccer, etc.) and haul my drums. My band that I perform in doesn’t have a trailer for equipment yet, so we each need to be able to transport our own gear. Unfortunately I’m a drummer, who naturally always has the most gear of anyone…which the 4runner does accommodate quite well to give you all an idea.

We got some quotes recently on both vehicles, and best I’ve gotten was $15k for 4runner which we still owe almost $19.5k and $6k for camry and we still owe $15k on. Would be happy with anything like Hyundai Tucson, Toyota Rav4, anything with over 70 cubic feet with rear seats down really. Ideally better mpg than the 4runner in this day and age of expensive gas.

We have a very limited budget and little to no money to pay extra on current car loans at the time. We hardly even eat out or do anything fun other than my band’s shows. If leasing is truly a no go for us in this way, then I really don’t know what to do other than continue paying on these vehicles and praying they don’t kill us in expenses of repairs over the next couple of years. Might even need to get CarShield or something of that nature…just in case, since both vehicles are older and over 100k miles. Which of course would increase our monthly expense - not including gas, insurance, etc.

Thanks ahead of time, and please note that I acknowledge past mistakes and am simply trying to forge ahead with the best possible plan to deal with those mistakes and commit to that plan. I just hope whatever suggestions for said plan can make the best sense for us to commit to.

I admit that I’m stupid with money when it’s come to cars these past few years, and I’m trying to become not stupid at it.

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Do you live near any areas prone to flooding?

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Should of told him take a vacation to Florida

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I lived in an area in Philly that was always flooded during storms and people would drive from all over the city and leave their cars there. Stay classy Philadelphia :joy:

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The good news is that they’re both older Toyotas, which should result in minimum out of pocket stuff. With regular maintenance they should be mechanically sound. The bad news is that there’s no magic bullet for this kind of thing, especially in today’s market. In the past you could potentially bury a few thousand dollars worth of negative into a car with lots of available rebates. Manufacturers have significantly pulled back on this practice though. I don’t know where you live but the absolute longshot would be to see what the EV incentives look like come January 2023. If the stars aligned just right in a state that has tax breaks and rebates to stack with Federal money, there might be a slim chance of picking something up that could absorb some of the hits you are talking about. There’s too many variables to predict that though. Inventory, interest rates and things like that could wipe that opportunity out. Best plan for right now would be to keep paying down your loans and don’t defer regular maintenance. Are your interest rates good on the loans? Things haven’t entirely gone to hell yet so if you got hosed on those rates maybe there’s an opportunity to refinance them and save a few bucks on the payments? Doesn’t hurt to check if your rates are high.

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How much longer do you have left to pay off the loans on the 2011 4Runner and the 2012 Camry?

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About 3 more years on the 4runner, and about 4 more years on the Camry.

8

What are the APRs on those loans?

Refi should be considered for sure. APRs can be lowered sometimes but the negative equity will never just disappear. Beware of any salesman of who says so.

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I’d be perfectly happy with an EV if it could accommodate at least most of our space requirement. I know that some sacrifice will be necessary - if anything is even possible. I’d actually prefer an EV, but figured those were more volatile at the moment…

I’d like to think it could even be an option to offload the 4runner at least and just continue paying the Camry. Ideally though a new lease monthly payment wouldn’t be higher than the $452 we’re paying on the 4runner, but I don’t see how unless maybe in a tiny eco car.

APR on Camry is 4.29 and 4runner is 6.99…

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Or take a road trip to Outer Banks, NC. There still have a chance.

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Visit this thread:

And try to refinance those loans. Not sure how much lower they’ll go as i’m unfamiliar with your particular situation of cars but it doesn’t hurt to try

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Is there a TL; DR version? All I saw was the $13k negative equity.

Found it

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Please do not do this. As some have suggested, look into refinancing the loans. Given the market and interest rates, I would not recommend leasing a new car or buying a used one at the moment.

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Will look into refinancing. Just concerned about extending the loans even more considering the age and mileage of the vehicles.

Is the Chevy Bolt EUV not worth rolling the negative equity into, whether financed or leased though? Isn’t there a $5900 rebate for those through the next couple of days?

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Only on the 2022s to make the after incentive price match the 2023 msrp.

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Gotcha, thanks. With that being said, what about a 23 Bolt? Would that not be a vehicle with some upside for rolling neg equity into? Whether finance or lease? I’d finance if seemed worthy as a car to roll into…

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In the past when you were able to combine upwards of 10k in rebates with a low interest rate this might not be the worst solution in the world if you HAD to get out of a car. The rebates aren’t as good right now and interest rates are much higher. The leases on these stink to begin with at the moment, they would be ungodly with negative equity added.

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When looking into refinancing, your main objective is to lower the APR (interest rate).

Refi for not more than 3 years.

Refi for 3 years (if you can afford to).

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The MF is 0.00384, so leasing that would seem to be a really bad idea. I don’t see any lease rebates for the 2023 on Edmunds

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:face_with_monocle: Ride it out especially if the 4runner fits your lifestyle so well with the drumming. The 4runner shouldn’t depreciate that much and is reliable, odds are most in your favor this way imo

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