Create negative equity via loan from a friend

Off-Ramp
1

Scenario:

  • You have a car with a KBB value of 5k (owned, no loan on it)
  • Can we create a loan from a friend for 20k in context of financing the car
  • Lease a car with super low MF say 0.0001 and trade in the car and roll the negative equity into the lease? as longs LTV is satisfied?

Friend (Thank you chatGPT)

  • Create a Promissory Note (Loan Agreement)
  • Draft a Security Agreement
  • File the Lien with the DMV (VTR-346)

Recently took a Blazer EV for lease at $114/mo, its a 54k car and assuming LTV of 1.3 , that’s 15k of possible negative equity amount

  • As part of monthly payments apart from $114/mo, i would just be paying interest on 15k extra along with principal amount?
    Loan is from a friend , so they get the money.

Goal : Borrow money at super low interest rate legally.

Update: A very stupid idea, 0% Balance transfer cars are much better way to achieve this. This was a purely theoretical “Is it possible”. Thank you all for humoring me.

2

How much do you owe the bank on that $5k car?

3

Are we trying to defraud the trade in tax credit or trying to get a cash out loan and put that on the bank?

  • leases have an advance limit, it has to stay inside that
  • presumably when you buy the car for $20k with a loan you’re going to pay sales tax on the $20k and the lender would have to deem the $5k car worth $20k before they lend it, otherwise it’s an unsecured loan / deficit collateral
4

0 , updated the post.

5

What would be the reasoning behind artificially creating negative equity?

6

no defraud tax credit, car will be still valued at 5k, what i understand is leasing company can pay off current loan of the traded in car and roll some as negative equity into the lease?

The goal is to borrow money at super low interest rate.

7

Your not borrowing money your taking a car worth 5k to the dealer where they will offer $4500. You will say I owe 20k, they will add the 20k to their car then you will pay interest on artificial money and shit ton for a vehicle.

In no scenario to you end up with cash.

8

Recently took a Blazer EV for lease at $114/mo, its a 54k car and assuming LTV of 1.3 , that’s 15k of possible negative equity amount

  • As part of monthly payments apart from $114/mo, i would just be paying interest on 15k extra along with principal amount?

Loan is from a friend , so they get the money.

9

You’re also going to pay sales tax, depending on the state, on top of the interest in the lease.

10

good point, would i paying be sales tax on negative equity too? am guessing we shouldn’t ?

11

The bank won’t accept the basement agreement you made with a friend to roll as negative equity.

Why not get some 0 APR credit cards instead of this mental gymnastics? You will not need to get a new car either.

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IMG_7813

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13

A Saturday night..is it possible? :grinning_face:

14

The lease agreements I’ve seen effectively treat negative equity as an increase in purchase price, so they apply sales tax.

Maybe not all lessors treat the same though so YMMV.

15

Fraud GIF by MOODMAN

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16

In most states, yes.

17

Go to a bank. That’s what they do.

18

some dude takes a ton of 0% apr cards, maxes them and puts the cash into t-bills, CDs, & HYSAs, then pays the cards off right before they’re due.

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9pwvy6
9pwvy6620Ă—419 46 KB

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20

This is the way.

OP’s way sounds way too close to fraud lol

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