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Posted in Auto Loans
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Question By
cupcakes2468

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If I'm upside down in my loan. What if i quit making pmts?and let the bank take the truck. I d

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New vehicles depreciate 25%

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as soon as you drive it off the lot.  Anyone that has a loan for a vehicle is upside down on their loan because of the way loans are written, You are paying more in interest than on the principle for at least the first half of the loan period. Of course the value of the vcehicle is also declining at the same time.  As far as I know there is no way to avoid being upside down on a vehicle loan. Best practice is to pay cash for the car, or go for a very short loan period (3 years max)  For most people the total of the payback on the loan will be close to twice the actual sticker price of the car. 

From my personal experience:  my car is now 10 years old. I originally had a 72 month loan.  When I tried to make extra payments toward the principle i was informed by the lender that I would incur large fees if the loan was paid off early, in order to recoup the lost interest.  It was then that i decided to not carry a standard loan for a car again.  Since i paid off the loan i have been putting an amount equal to that payment away in savings so that i will have a substantial down payment and will be able to take a much shorter loan on my next car.  I now have close to 18,000 put away and will take a 24 month personal loan from my credit union for the balance at a much lower interest rate than a standard auto loan.

The other option is to lease.

hope that helps

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Reply by
EddyTX

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the Info the Trying2 U states below is very accurate as well.  Avoid a repo so your don't ruin your credit for 7 years.  If that happens you will not be able to get any loan for a while.

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You get a repo on your credit reports, which will damage your credit for seven years. The bank will auction off the vehicle for whatever they can get, which will be less than what the vehicle is worth and much less than what you owe, then you will be responsible for the remaining balance which will be applied to your credit reports and the bank may take you to court and get a court ordered judgement for you to pay the amount due, the court may chose to sell your assets or garnish your wages. That of course is the worst case scenario as sometimes the banks may not spend the time and money taking you to court, but it is best to assume that they will. Long story short, try to avoid this at all costs, figure out a way to get the loan above water.

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