I’m in a bit of a pickle here and I’m trying to get some different opinions on possibly financing a heavy rebate EV.
I currently own 13k @ 21% interest (horrible ik but that’s not even the worst of it) on a 14 Ford Taurus.
EXTREMELY long story short, the car has a rolled- back odometer (at 72k but is actually at 160k as I’m writing this) and all legal means have been exhausted, has broke down after 10k of driving which resulted in me had to take out a personal loan to get it fixed, and now sits in a garage until my suspension is lifted after I foolishly cancelled my insurance.
The way I see it now is, it’s financially unwise to keep pouring money into this car as it’s shown to be somewhat unreliable and I have a far job which requires driving. I REALLY wish I could just pay the extra but the with the interest rate already being terribly high, I get approximately $250 in interest every month. I did some shopping around and found that most places will take it for approximately 5-6k which leaves me with a terrible negative equity of 8k and I’m very aware no banks would put up with that unless I have a hefty down-payment.
I currently don’t have a down payment as I’m still figuring out what exactly I’m gonna do but one option I saw was financing a EV with hefty rebates which would count as a down payment (I need some clarification on that) and was wondering if this would be a viable option?
At the end of the day I NEED a reliable car as my second job is far already and I occasionally need to take day trips places and don’t want to be stuck on the shoulder of a highway.
Open to correction, but from context I’m guessing that your credit isn’t great, which would introduce other cost barriers (assuming you could even get approved).
Yes, I got insurance back on the car again the second I found out it was suspended. Since then it’s been insured.
If you were wondering why the interest was that bad I made a very bad judgement and went to those sketchy low-credit/low-down payment car lots and that’s how I ended up here
Yeah while that is true, it would mean I would have a more reliable car. I understand that my monthly rate will most certainly go up but honestly I just want a reliable car. I already have to use my parents car to get to my far job which puts stress on their vehicles and I have to pay for fuel that I don’t even get to fully utilize…
You can search the forum. This has come up many times before. Long story short, EV rebates don’t exist to help people with negative equity. They exist to make the payment attractive to lessees.
Rebates exist to make a $350 lease payment on a car that will hardly move at $600 without them. You’re proposing to re-borrow an additional, say, $11,000 in NE and pay $700 on a car everyone else is paying $350 for.
If that’s your best option, then go for it. But don’t be under any illusion that rebates are helping you here. You are simply re-borrowing the money and paying rent charge and tax on it every month.
Still, if he can actually get approved on one of the many EV leases at a subvented rate, he’d be paying a lot less interest on his remaining principle. Even if he can essentially “refinance” this negative into a lease at 4-5% interest, that’s still possibly a better move all while driving an under warranty vehicle that OP doesn’t need to worry about.
Obviously the only real “solution” is to pay off the loan in cash as quickly as possible or re-fi, but we need to meet people where they are on this forum, and one or both of those things might not be possible for OP.
OP, when you say you owe 13k at 21% interest, does that mean you owe 13k in principle, because unless this is some shady crap you shouldn’t be paying remaining interest if paid off early.
So essentially the car was financed at a principal of $17,426 with the 21% interest rate at purchase.
As of right now the balance is $13,330 at the same interest however looking at their “payoff quote” via the bank’s app, they state if I pay it off today, it’s $13,528 and if I pay in let’s say 15 days, I now owe $13,628. It’s like even if I throw extra payments on that the interest is really making it hard to bring that principal down in a reasonable time. The longer I wait the more the value of the car will decrease and God forbid it breaks down for good this time.
I currently pay a whooping $430 a month for this hunk of junk
I swear with every fiber in my being I would love to pay the whole principal/payoff amount but I really don’t have it in me rn so I’m trying to find ANY way to turn the favor here…
Just how much driving are we talking about? Would an EV even fit your needs? Do you live where you can install a charger for overnight charging? Do you work where you can charge up?
I live in a metropolitan area so I have a decent amount of nearby chargers so I would do primarily local driving except my far job which is 20 miles out which I have to go to on the weekdays at varying times and weekends.
I honestly don’t need anything fancy, I just really need a car
You NEED to refinance this, immediately or start making 1.5-2x payments, whatever you can handle.
If we’re nice and assume 8k negative, you’re going to essentially need a car thats $200/mo all in before anything to make your payment the same with the negative equity, roughly.
How many miles a year? Sounds like you could lease. Definitely go that route if true. You could be free and clear of that negative equity in 36 mos. $8k NE would add approx $240 to a 36-mo lease, so if you find something (check marketplace) for $360/mo with no more than first month DAS, you could be paying $600 for 36 mos and be done and start over.
On a lease that’s say $200-$300/month, how much negative equity will they even allow to be rolled? The additional loan exceeds the total cost of the lease, I’m wondering if you’d find problems there.
While there’s an interest benefit to rolling into a lease (assuming banks will allow), there’s likely a larger benefit to selling to Carmax/Carvana and taking a higher interest rate personal loan. I recently helped my buddy do just this and the math made so much more sense getting an added 5k on his car over the dealer’s 25k offer. The extra interest on the 7.99 personal loan is certainly not 5k over 3 years.
So what I’d suggest is to figure out what a dealer will offer for your car vs. Carmax etc, then calculate if that gap exceeds the interest cost of a personal loan vs. rolling your negative equity into a lease, then incorporate that decision into the monthly payment you can get on an EV from a broker on this forum. That total cost may exceed your current payment slightly but maybe that’s worth it? It’s already going to be difficult so I think using a broker would be really helpful for you.
Edit: total interest on a 3 year personal loan of 8k, even at 13%, is $1,703.86. If you can get more than that for your car by avoiding dealers “rolling it in”, then you’re best served getting a personal loan provided the interest rate was 13% or better. Just an example to illustrate the idea.
It’s not totally clear what happened on the insurance front for your current car, but EVs typically have much larger monthly premiums. So factor that into your calculation if you are intent on moving forward. I bring this up because some carriers may already charge you more for not having continuous coverage over the last year.
