I am trying to help a friend out with this really underwater BMW X2 loan. It is a BMW X2 with X drive. The agreed upon sales price was 30XXX but she purchased for 41,2XX back in late November. They rolled in 3K of negative equity from a mazda 3 into this deal. The dealer also sold her United Car Care’s extended warranty and theft recovery system for $3895 and $895. To make matters worse, it is a 6 year loan with a 15.95% APR. They are paying almost 900 a month for the car and over 500 of that is going to interest alone. The payoff amount 39,5XX.
They also have a leased 2021 Honda Civic EX that is costing them $262 a month. I think this was leased in late June 2021. It’s 36/10k lease as well and the buyout amount is 20XXX. Also due to unfortunate circumstances, she inherited a salvaged 2011 Nissan Rogue with 145k miles.
I don’t know what is the best thing to do in this situation. I was thinking of having them sell the Civic if there is any positive equity there and using that towards paying off the X2. And also selling the X2 and paying off the rest of the loan before they continues paying 500 a month in interest. They’re left with the Rogue which they can drive it till the wheels fall off or the transmission fails.
I was also thinking of trying to cancel the extended warranty and theft protection to recoup some money but not sure if that is possible or not in this situation. But even then the payoff amount will still be like 35XXX and the car is only worth like 22k (I have run it through shift and carvana and that was the best offer so far).
Are there any better ways of dealing with this situation?
The X2 is going to become a money pit. The Corolla is a much better car to keep over the long term if finances are an important consideration (sounds like they are).
They likely need a car and a salvaged 2011 rogue with 150k miles is at risk for a significant dollar repair any time.
The civic isn’t really costing much relative to the value it’s providing( reliable, good gas mileage, relatively new car). Getting rid of that isn’t the answer. Obviously depends on how much money they make but need to likely get out of the x2 asap
Is their credit still pretty bad? Refinancing would be the best option if their credit has improved and they’re able to pay down enough principle to get the loan to an amount they can get approved.
Something still isn’t adding up, unless it’s tax - you’re talking about $7,000 of adds but to get to $41,000, there’s still another $4,000 missing. Do you have an enumerated list of what took the price to $41,000?
There are ways but none that wouldn’t require some cash out payment.
But few Questions,
What’s their credit now?
Do they have any cash savings available?
Try local dealers, may be they’ll want to pay more than 22k to buy out just a little more not a lot.
If they have good credit, try 0% credit card balance transfers, to pay some balance down & cut down on those extra expenses & pay all down without paying too much interest.
This is why I stopped telling friends I could help them get into a “cheap lease”. More times then not there’s a nightmare already sitting in their driveway for which you are now partially responsible for.
Refinance
BMW dreams and a credit card APR is unreal.
Your a good friend for helping but unless your really into her, or looking to marry (which I would rethink given her financials) Tell her to refinance when she can and avoid them for a little.
Friends don’t help friends buy cars. It is a disaster every time I tried to help out. They have come to me several times to sell their mistakes though.
My immediate family trusts my decisions on their cars, friends just want what they want (or their wives) and usually will pay whatever it takes to get the shiny one on the local lot instead of branching out to further dealerships.
If she can get $1k for the Rouge and a personal loan for $12,000, she can walk away from the X2 and just keep the Corolla, and be out of this mess in three years while saving ~$500 a month.
Marcus by Goldman Sachs, Discover, So-Fi are decent options for personal loans if you happen to have blemishes. They do soft-credit checks to find your rate and you can then proceed further if you choose to go that route. You can also go through a ton of credit unions out there but your income may be scrutinized.
back in the day when I got my first used car off a lot at the dealer, and didn’t knw better, the dealer just financed and gave me 14% apr as well, i thought that was par for the course… As others have mentioned, get a personal loan with low/0 interest, and sell the car to a local dealer (should be more $ than autonation, carvana, vroom, etc.)
First step would be cancelling the warranty. They should keep the Civic for sure.
Whether to sell the X2 to buy a car from $10k thread would be the next debate. But looking at the APR from the loan looks like these people are very careless. Good luck to you.
$13k underwater! Have you looked for the option for selling it privately? How much can you get if you do sell it privately? Is it 2021 BMW X2? KBB’s dealer trade-in value is $33k for 2021 BMW X2 with 8k miles. Some dealers do honor KBB value if you decide to sell the car. Enterprise car sales do use KBB value to buy the cars. In fact, you might have to shop several other places to get the best value. Shop at Carmax / Shop everywhere. Don’t use Carvana/Shift as face value for the best offer.
Honestly, my suggestion would be - keep the Civic as it holds the value for the future resale plus monthly lease payment is not that bad. And get rid off of this BMW and Salvaged Nissan.
and a personal loan for $12,000, she can walk away from the X2 and just keep the Corolla, and be out of this mess in three years while saving ~$500 a month.
