Car loan at 27%. Need help please.

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Jun 16th, 2016 11:55 am

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May 11th, 2016 6:05 am

THOUGHTTWICE [OP]: Newbie; May 10, 2016; 26 posts; 11 upvotes

May 11th, 2016 6:05 am

Car loan at 27%. Need help please.

Okay, so before anything else; I know it's stupid and I know that I royally screwed up. Last year I tried to purchase a vehicle since I had rebuilt my credit after University and everything was great. At first I considered purchasing a vehicle for thousands ~$5000 or below so that even if the worst happened, I could pay it off easily. Unfortunately at the same time as I had good income, my brother moved in with me and we got a place together as he was borderline homeless. He agreed to pay for half the rent and to repay me for buying him things such as beds, clothes, etc and basically setting him up fresh for success. I was an idiot. I looked at the money I had been saving to pay off my car in a lump payment and used a good chunk of it to set him up. Long story short, he never payed for anything and I worked two jobs and was always too tired to chase him for the money. Then one day he said he was moving to a friends place, insulted me and took off. I had to give up the place and am now sleeping on a friends couch for the last two months, cleaning the house, cooking...to earn my keep.

You may ask why, and the reason is that I had to quit my second job as I developed some spine and chest problem and the doctor said that if I wanted to get to 30 in good shape, I should cut things down. So I pretty much lose 1/3 of my income and that put a pinch on me. I still spent wisely...*sigh* but no longer had a savings account or any money saved up in my chequings.

So onto the problem, numbers and facts: I went to buy a car at many dealerships, all of them rejected me due to my credit being barely in the 400 range at the time. I had a secured credit card though and used it to buy groceries and whatnot, putting the money back in right away. So finally TD bank agreed to give me a car loan, but that it had to be above $12000 minimum and not older than 5 years. The dealership I went to sold me on a 2011 Mitsubishi Outlander for $16.8k and I don't know what I was thinking, I guess because it was my first time buying a car and the idea of it was more exciting...I didn't really think clearly about the math and signed off on a 27% interest rate from TD which refused to budge. "I can pay lump payments" was what I thought. But, I got ill(still am), spent money stupidly on my brother and while I have no missed a single payment on the car loan; I am finding it difficult to try and get back out on my own and save money.

Long story, short: I signed a loan from TD for a car at 27% of my own volition, got medical problems, burned up my savings and chequings and am now hanging on by a thread. I have put the car up on Autotrader and Kijiji for $13000 and am hopefully trying to find a buyer and pay the difference as my monthly payments do nothing with a 27% interest rate. Is there any other way out of this mess I've made for myself? Any advice or suggestions from you guys that could help? I honestly don't know what to do. It's been about three weeks since the cars been up and I haven't had any inquiries let alone viewings. Not sure if it's because of the Saskatchewan economy or what, but I'm at a loss.

135 replies

May 11th, 2016 11:07 am

bruceh2015: Deal Addict; Apr 13, 2015; 1108 posts; 214 upvotes

May 11th, 2016 11:07 am

... and this is why these bad credit bank deals are a royal ripoff and a disaster just begging to happen. You should have gone for a bad credit car loan and borrowed no more than 5K. These banks prey off people like you. I'm sorry.

I'm unclear from your post, but are you healthy and working now? What's your income/expenses/car loan payment?

May 11th, 2016 11:15 am

theguyz: Deal Addict; Dec 12, 2006; 4345 posts; 562 upvotes; Messed Up Area

May 11th, 2016 11:15 am

So basically your credit was/is really bad, and creditor took you and you agreed to terms. Secured credit cards do not mean you have good credit, they basically mean you put colateral ( cash ) and they help a person, by reporting to bureau's on credit limit and payment history building score.

Contact TD and see if you can renegotiate the interest, if you have good payments for a year or so they may rerun your credit application.

Quick math shows your payments are in range of 630 a month if 5 year term and approximatlty 280 per month is interest rate.

Suggestion, sell all non essentials( keep just basics ) and put as lump payments or take a higher loose on vehicle and drop by 1-2k to sell.

Also when lenders start applying interest after a 20% interest they know chances are 90% + the loan will be defaulted, but they have colateral of seizing vehicle and your doubled payments towards cost - what they can auction vehicle for.

May 11th, 2016 11:17 am

bruceh2015: Deal Addict; Apr 13, 2015; 1108 posts; 214 upvotes

May 11th, 2016 11:17 am

theguyz wrote: ↑So basically your credit was/is really bad, and creditor took you and you agreed to terms. Secured credit cards do not mean you have good credit, they basically mean you put colateral ( cash ) and they help a person, by reporting to bureau's on credit limit and payment history building score.

Contact TD and see if you can renegotiate the interest, if you have good payments for a year or so they may rerun your credit application.

Quick math shows your payments are in range of 630 a month if 5 year term and approximatlty 280 per month is interest rate.

Suggestion, sell all non essentials( keep just basics ) and put as lump payments or take a higher loose on vehicle and drop by 1-2k to sell.

He won't be able to sell the car for a loss unless he has cash to cover the difference. There's a lien on that car. Chances are very high he's upside down on that loan.

May 11th, 2016 11:18 am

theguyz: Deal Addict; Dec 12, 2006; 4345 posts; 562 upvotes; Messed Up Area

May 11th, 2016 11:18 am

bruceh2015 wrote: ↑He won't be able to sell the car for a loss unless he has cash to cover the difference. There's a lien on that car. Chances are very high he's upside down on that loan.

Thats why I said sell all non essentials for cash.

He maybe even better off getting loan from easy financial at lower interest but still high at 20%

May 11th, 2016 11:19 am

bruceh2015: Deal Addict; Apr 13, 2015; 1108 posts; 214 upvotes

May 11th, 2016 11:19 am

theguyz wrote: ↑Thats why I said sell all non essentials for cash.

He maybe even better off getting loan from easy financial at lower interest but still high at 20%

I think they're 27% at BEST. However, if they'll give him an unsecured loan, that would clear the lien.

May 11th, 2016 11:32 am

Vinotintazo: Deal Addict; Jul 24, 2011; 1099 posts; 236 upvotes

May 11th, 2016 11:32 am

off topic, but can you sell a car to a person, if you havent payed it off?

May 11th, 2016 11:39 am

Johnny0c: Deal Addict; Jan 14, 2012; 1259 posts; 286 upvotes; Woodbridge

May 11th, 2016 11:39 am

OP whats your credit like now?

May 11th, 2016 11:53 am

Cas77: Banned; May 12, 2004; 9756 posts; 4131 upvotes; Ottawa

May 11th, 2016 11:53 am

How much is left to pay on the car? I'll buy your debt for 25%...think about it you save 2%.

May 11th, 2016 12:31 pm

yyz64: Deal Addict; Dec 5, 2005; 1020 posts; 637 upvotes; Cambridge,Ontario

May 11th, 2016 12:31 pm

Vinotintazo wrote: ↑off topic, but can you sell a car to a person, if you havent payed it off?

I sure you can but with a lien on it,TD could come and take it from you if they wanted to.In Ontario it should show up if you go to the ministry and get a used car sales package not sure about Saskatchewan.

May 11th, 2016 1:11 pm

TrevorK: Deal Expert; Aug 2, 2001; 17603 posts; 8253 upvotes

May 11th, 2016 1:11 pm

THOUGHTTWICE wrote: ↑Is there any other way out of this mess I've made for myself? Any advice or suggestions from you guys that could help? I honestly don't know what to do. It's been about three weeks since the cars been up and I haven't had any inquiries let alone viewings. Not sure if it's because of the Saskatchewan economy or what, but I'm at a loss.

I will preface this with the statement that I do not recommend this option.

One way that you can improve your credit score is to have the vehicle written off. This will enable you to repay the loan, which will in turn allow you to receive a lower interest rate on your next vehicle. For example, a co-worker was in a similar situation to you and a drunk driver went through his parking lot and damaged a bunch of vehicles. His ended up being written off and on his next vehicle the interest rate was half of what it was.

As for a more serious answer, I would highly recommend looking at increasing your income (yes I know you give reasons you do not want to). At 27% interest it will be very difficult to manage these payments in terms of how long it is until you can repay the vehicle. The problem is, you still need a vehicle (living in Sask I am assuming mass transit isn't great) so even if you sell the Outlander you still need to buy another. This may require getting another qualified medical opinion on your condition to give you the confidence that you are able to work a second job.

This is all of course assuming you have exhausted the possibility of renegotiating the rate with TD>

May 11th, 2016 3:34 pm

Anikiri: Deal Guru; May 1, 2012; 10293 posts; 10478 upvotes; Toronto

May 11th, 2016 3:34 pm

There is a lot of iffy suggestions on this page. It's hard to focus on what you should do if you aren't concretely sure on the following consequences.

Your options are the following:

1. Go to TD and renegotiate the interest rate. I don't see why they wouldn't do this as you are very close to defaulting on the loan. Make sure they do not hit you with an R7 if you do settle this way. Often times, they will tell you they won't rate you an R7 but they do anyway. It is irreversible and really... if it happens there is nothing you can do.

2. Repo it. Tell them you cannot pay the loan and for them to take the car. The loan is secured on something, so let them take it. It's not like you have anything left anyway.

3. Declare Bankruptcy and start over again. You don't have much for liquidation anyway, so just do it. They'll take your car away and whatever you got left in the bank.

Frankly speaking, your best bet is to go #3. It is a clean slate. After 7 years, your score is back to square one. The downside is you cannot get any loans, but you shouldn't anyway since you took a 27% loan. Good luck.

May 11th, 2016 4:14 pm

THOUGHTTWICE [OP]: Newbie; May 10, 2016; 26 posts; 11 upvotes

May 11th, 2016 4:14 pm

Hello all, thanks for the responses. I'll try answering all the questions.

Yes, I am still working. In fact I am rather fortunate in that regard as when I explained the situation to my employer, they gave me a raise on the spot and it has helped save me from crashing financially many times. My medical problem started off as a muscular tear in my chest and I thought it was just a sprain, but one night woke up on my stomach unable to breathe properly. My doctor said that I'd made it worse by continually working without seeking professional insight. Long story short I made it worse and my body began compensating for it to the point whereby I had pinched disks in my spine. Now I'm seeing a physiotherapist to try and fix it(Which costs money at about $50 a session and I can barely afford that). Anyway I've improved but it still hurts and I have to continually stop my back from slouching as it's very painful to stand up straight or reach for things.

Back to the issue at hand though. I cannot default on this car loan or declare bankruptcy. I worked very hard to repair my credit which is at 600+ now and I know it's not very impressive, but I did it on my own and owned up to my past mistakes in order to do that. I signed that loan and the responsibility is on me to deal with it one way or the other, not shirk responsibility and run away. Despite how angry I am at myself and TD, no-one forced me to sign. I'm almost 30 years old, I can't wreck my credit when I have such an important period of my life ahead of me. Yes it's my fault for signing that loan with TD and I tried calling them about my loan after the honeymoon phase with the car, but the lady I spoke to said that they would not change the interest rate and that I knew what it was when I signed.

I thought I was financially smart but I still made a mistake in thinking that my prior work situation would always be the same. I didn't take into account the things that happened and spent willy nilly. I'll try calling TD again today and seeing what they say, but it's honestly heart breaking seeing such a relatively "small" amount never changing by more than $6 a month when you're paying over $500. This car would have been more than half paid off by now. I know it's my fault, but I can't believe things like that are morally right. The car I initially wanted to buy cost $7000 and TD refused to give me a loan for even $10,000. But gladly would if I signed over $12,000? I get it, it's business; but that's terrible.

May 11th, 2016 4:14 pm

CNeufeld: Deal Guru; Mar 23, 2008; 13002 posts; 9929 upvotes; Edmonton

May 11th, 2016 4:14 pm

Anikiri wrote: ↑There is a lot of iffy suggestions on this page. It's hard to focus on what you should do if you aren't concretely sure on the following consequences.

Your options are the following:

1. Go to TD and renegotiate the interest rate. I don't see why they wouldn't do this as you are very close to defaulting on the loan. Make sure they do not hit you with an R7 if you do settle this way. Often times, they will tell you they won't rate you an R7 but they do anyway. It is irreversible and really... if it happens there is nothing you can do.

2. Repo it. Tell them you cannot pay the loan and for them to take the car. The loan is secured on something, so let them take it. It's not like you have anything left anyway.

3. Declare Bankruptcy and start over again. You don't have much for liquidation anyway, so just do it. They'll take your car away and whatever you got left in the bank.

Frankly speaking, your best bet is to go #3. It is a clean slate. After 7 years, your score is back to square one. The downside is you cannot get any loans, but you shouldn't anyway since you took a 27% loan. Good luck.

Speaking of "iffy suggestions"... I don't think I'd be considering a bankruptcy for a single ~$14,000 debt. The OP could talk to a credit counseling service to see what they offer as solutions, though.

OP, if you really want help, you'll need to post more details, like someone else already asked for. How much do you bring in, what are your expenses... You say you're sleeping at a friend's place now, so the only monthly expense we can even guess at is the car payment. Which doesn't seem unmanageable, on it's own.

C

May 11th, 2016 4:19 pm

Anikiri: Deal Guru; May 1, 2012; 10293 posts; 10478 upvotes; Toronto

May 11th, 2016 4:19 pm

CNeufeld wrote: ↑Speaking of "iffy suggestions"... I don't think I'd be considering a bankruptcy for a single ~$14,000 debt. The OP could talk to a credit counseling service to see what they offer as solutions, though.

OP, if you really want help, you'll need to post more details, like someone else already asked for. How much do you bring in, what are your expenses... You say you're sleeping at a friend's place now, so the only monthly expense we can even guess at is the car payment. Which doesn't seem unmanageable, on it's own.

C

He has a credit score of 400. It isn't going to go up from this ordeal. At this point, the fastest way to recover and shed debt is to declare bankruptcy. If he incurs an R7, that will completely gut his credit score to a point where it will take longer than 7 years to recover.

The fastest way out of the situation and recover his self-worth is to declare bankruptcy.

Edit: NM his credit is above 600. Well this changes things.

May 11th, 2016 4:22 pm

THOUGHTTWICE [OP]: Newbie; May 10, 2016; 26 posts; 11 upvotes

May 11th, 2016 4:22 pm

I make $1600 on average a month. I pay for my vehicle: $500(TD)+$120(SGI)+$40(GAS) Then I have my phone which is $60 a month, groceries about $100. University I'm on payment as well at $250 a month. Lastly I do pay about 1/4 of the rent for my friend and that's $300.

May 11th, 2016 4:43 pm

bruceh2015: Deal Addict; Apr 13, 2015; 1108 posts; 214 upvotes

May 11th, 2016 4:43 pm

THOUGHTTWICE wrote: ↑I make $1600 on average a month. I pay for my vehicle: $500(TD)+$120(SGI)+$40(GAS) Then I have my phone which is $60 a month, groceries about $100. University I'm on payment as well at $250 a month. Lastly I do pay about 1/4 of the rent for my friend and that's $300.

TD Approved this?? My God, this is so irresponsible of them! Itching to see a particular member jump in and defend the bank! Unbelievable!

May 11th, 2016 5:01 pm

CNeufeld: Deal Guru; Mar 23, 2008; 13002 posts; 9929 upvotes; Edmonton

May 11th, 2016 5:01 pm

THOUGHTTWICE wrote: ↑I make $1600 on average a month. I pay for my vehicle: $500(TD)+$120(SGI)+$40(GAS) Then I have my phone which is $60 a month, groceries about $100. University I'm on payment as well at $250 a month. Lastly I do pay about 1/4 of the rent for my friend and that's $300.

So that leaves you with (on average) $230 per month?

How much do you still owe on the car?

C

May 11th, 2016 5:02 pm

CNeufeld: Deal Guru; Mar 23, 2008; 13002 posts; 9929 upvotes; Edmonton

May 11th, 2016 5:02 pm

bruceh2015 wrote: ↑TD Approved this?? My God, this is so irresponsible of them! Itching to see a particular member jump in and defend the bank! Unbelievable!

TD didn't force anyone to take a loan for 40% of their monthly take home... But the OP acknowledges that was a mistake, so on with solutions!

C

+1

May 11th, 2016 5:08 pm

bruceh2015: Deal Addict; Apr 13, 2015; 1108 posts; 214 upvotes

May 11th, 2016 5:08 pm

CNeufeld wrote: ↑TD didn't force anyone to take a loan for 40% of their monthly take home... But the OP acknowledges that was a mistake, so on with solutions!

C

TD should NOT be legally able to offer these ratios. This is insane to believe that a person earning $1600 should be paying $500/month for a car. Yes, the OP was a fool to sign, but the bank is behaving in an equally irresponsible manner. This is particularly relevant with a person who has bad credit. The bank is willfully exploiting people with a history of bad decisions. It shouldn't be allowed.

The bank should be shafted for this!

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