Reality Check: Rolling Over Your Underwater Car Loan Into A New Loan Is A Terrible Idea
If you are looking for a corner of the Internet that is just grumpy enough to make you smile without being the incessant torrent of vitriol which is current events-themed social media feeds, you can do worse than the Jalopnik website. Here, curmudgeonly car enthusiasts throw a wet blanket on the latest trends that other car websites are raving about, from heads up devices to autonomous vehicle technology. In a recent post, Lawrence Hodge goes full Oscar the Grouch on the practice of trading in cars on which you owe more than the trade-in amount and rolling over the outstanding balance for a new loan. He cites an example of a couple who traded in two cars so they could buy a Ford Explorer. The trade-ins left them owing $17,000. Instead of deciding that negative $17,000 is not enough money to buy a Ford Explorer, they simply authorized the lender to add their old debt into the balance they owed on their new car loan. This means that they must pay $66,000 for a $49,000 vehicle. It is easy for you to say that you would never pay so much for an asset that depreciates so quickly, do you really have any better ideas about how to afford a car? The best way to find such ideas is contact a Boca Raton debt lawyer.
When Payday Loans Go Vroom
There are probably frugal living blogs out there that would have a feeding frenzy of Schadenfreude over the fools who paid $66,000 for a Ford Explorer, but not the friendly grouches at Jalopnik. Hodge clearly understands that the motivation for this trend toward trade-ins on underwater car loans is desperation. Car payments are simply unaffordable. The average monthly car payment is almost $800, and the number of people whose monthly car payments exceed $1,000 is the highest it has been in ten years. This is not a case of a generation’s insatiable craving for vehicular avocado toast; the mileage on the average trade-in is about the same as it has always been, and many of these loans with steep monthly payments are for used cars.
In general, the option to tack an old loan onto a new one and end up in more debt than ever tends to get offered to people in desperate financial circumstances. It is precisely how payday loans get so huge so quickly. The most disturbing thing in this story, then, is how much the car loan industry is coming to resemble the payday loan industry.
There are ways out of this situation, but they are not exactly simple, and they vary from person to person. If you are in financial distress because of your car loan, a debt lawyer can help you find the best solution.
Work With a Debt Lawyer to Get Your Debts Under Control
A South Florida debt lawyer can help you if your outstanding debt obligations keep getting bigger, even though you make your payments on time. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.