Quick Question: I’m attempting to get out of debt and I currently have a vehicle that I really can’t afford to pay for and get out of debt at the same time. I have about 3 years left to pay on it and I’m not sure if it will help or hinder my progress by doing a voluntary repo. If I turn it back in, it will free up a nice sum of money to help me pay down some debt and get my current bills caught up. I want to be able to purchase a home in 2 years. HELP ! Not sure what to do……..
I’m not 100% certain but I believe that with a voluntary repo the car company takes the vehicle, sells it at an auction and you end up having to pay the difference (between what they got at auction and the amount you owed on the vehicle when you turned it in). Have you tried selling it yourself first? Why not sell the car for what you still owe on it? Instead of repo. Repo will look terrible on your credit report when you go to apply for a mortgage. Then, get a “clunker” – just some basic transportation to get you safely from Point A to Point B that you can pay cash for until you buy your home at least. Then, you can “upgrade” to something a bit nicer. I still would get a decent used car. I am not big on that depreciation that cars do.
I don’t mean to be unkind and I certainly don’t know you but if you can’t afford the car now, how on earth can you afford a home in 2 years? Sounds too ambitious to me. Don’t turn in the car! My ex did that. Everything was fine for a bit. Until the bank notified us they had sold the car. The bank subtracted the ridiculously low price the car sold for from my ex’s original car loan. He ended up owing only a couple hundred dollars less than he did before giving up the car. You see, the bank isn’t looking to sell the car like a car lot. All they want it to be rid of the car.
I know you don’t mean to be unkind and your question is a good one. I can afford the car, it’s just that I would like to get on the path to healthy spending habits and good credit. I purchased this car on impulse and it wasn’t the best decision I’ve made but I’m here now trying to rectify it. See, I had to realize it’s not about what I can “afford” but more so about what I NEED. A car note of about $600/mo is no longer what I can afford or need. I am on a mission to pay off my old debts, catch up my current bills and build a good sound credit history. I’ve got to start somewhere and my mistakes are in the past. I’m not ambitious – just a strong believer in the old adage – “You can do anything you put your mind too”. So, any ideas about whether I should proceed with the repossession or keep the car and have alot less to catch up my other bills?