Archive for September 2008

SERIES: Sell Car With Negative Equity – Part 4

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Part 3 – Sell The Car With Negative Equity – Option A – Pay Off The Balance

Part 4 – Sell The Car With Negative Equity – Option B – Transfer The Negative Equity Balance

In this series, we are assuming that we have a car with an actual value of $12,000 but the loan balance is $18,000.  This means that the car has negative equity of $6,000.

This is quite the lovely situation, but it is possible to make the car leave.

Obtain A Signature Loan From The Bank or Credit Union

One usually must have decent credit to obtain a signature loan.  Obtain a $6,000 loan from the bank.  Next, find a purchaser who is willing to pay $12,000 for the vehicle.  Use the signature loan money to pay off the negative equity portion so that the title is clear.  With this one transaction, the debt has been reduced by 66% – from $18,000 to $6,000!

Transfer The Negative Equity Balance To A 0% Credit Card

I really do not like credit cards, but I really do not like huge car payments and car loans either!  If one has the option to roll the negative equity to a credit card at 0%, it will allow the car to be sold and all of the subsequent payments on the remaining $6,000 will go directly to principal!  I have also seen several credit cards that offer 2.99% for the life of a balance transfer.

Option B does not entirely eliminate the debt or the payment, but it will substantially reduce it!  It will certainly help one's journey to financial freedom obtain serious traction.

In the final part of this series, I will be sharing some side benefits to eliminating a car with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

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SERIES: Sell Car With Negative Equity – Part 3

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Part 3 – Sell The Car With Negative Equity – Option A – Pay Off The Balance

Let's assume that a car has an actual value of $12,000 but the loan balance is $18,000.  This means that the car has negative equity of $6,000.

This is quite the lovely situation, but it is possible to make the car leave.

Use Savings

If one wants to sell the car, then the negative equity must be covered in order to provide a clear title to the purchaser.  The fastest way to clear out the negative equity is to find a purchaser who is willing to pay $12,000 for the car and use $6,000 from savings to clear up the negative equity.  This is by far the fastest and easiest way to clear up the negative equity situation – IF you have $6,000 in savings!

Earn the Difference

If one does not have the money to cover the negative equity, then another way to accomplish the exact same thing is to earn additional income.  Work overtime or acquire a second job to earn enough to cover the negative equity.

This is definitely not a fun answer, but I do not like negative equity situations either.  The tough part about this option is the fact that it takes additional time and it is possible that the negative equity will increase because the car will continue to go down in value.

Sell Something Else

If one has an item that they no longer need, want, or use that has value, it can be sold to cover some of the negative equity.

I prefer Option A the most because it eliminates the entire debt and frees up the entire car payment to use for additional debt pay-off, savings, giving, and investing.

In the next part of this series, we will continue to discuss ways to sell the car even with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

Receive each post automatically in your E-MAIL by clicking HERE.

SERIES: Sell Car With Negative Equity – Part 2

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Equity is determined by the following equation:

Vehicle Actual Value – Vehicle Loan Balance = Equity

If the Equity number is negative, then that means that the vehicle has negative equity.

As you prepare to sell your car, it is very important to know the actual value of the car and the actual amount owed.

I emphasize the word ACTUAL because most people tend to overestimate their car's value and underestimate what they still owe.

How does one determine how much their car is actually worth?  Obtain a quote from Kelley Blue Book and Edmunds.  You will need to know the year and make of your vehicle including your engine type and mileage.  These two sites will provide you a general idea of what used cars like yours are selling for in your area.  Recognize that these are average selling prices.  That means that cars are selling above and below that number, but this is the price that one can expect to sell the vehicle.

Now that you know the actual value of the vehicle, it is time to determine exactly what is owed.  Contact your lender and obtain the actual pay-off balance of the car loan.

Now, use the equity calculation to determine your vehicle's equity.  If it is negative, then you have a car that is known as "upside down".  It has negative equity.  You owe more than it is worth.

In the next part of this series, we will discuss ways to sell the car even with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

Receive each post automatically in your E-MAIL by clicking HERE.

SERIES: Sell Car With Negative Equity – Part 1

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Some of the actions in this series might be difficult to execute, but when one recognizes how much a car really costs it can really help solidify sound financial decisions.

I believe that having a car payment is a HUGE financial mistake.  Here is why.

First, cars drop in value.  New cars drop in value FAST.  Most new cars drop in value by around sixty percent in the first four years.  This is called depreciation, and it causes one's net worth to drop.

Second, car payments reduce one's ability to gain financial freedom.  Loan interest can range from 0% to 20% or higher depending upon one's credit.  Even 0% loans are negative financial events because the money is going toward a car that is dropping in value.  What else could one do with a monthly car payment?  Give more?  Invest more?  Spend more?

When I recognized how much my debt was costing me, it solidified my commitment to achieving financial freedom.  I was so dad-blamed sick of debt and what it was doing to my family.

Read the entire "Sell Car With Negative Equity" series HERE

Receive each post automatically in your E-MAIL by clicking HERE.

Marching To Debt Freedom – Couple #3 – Month 09

Introduction

This couple has been married for many years and have one child.   They have HAD IT with their debt and have been marching toward debt freedom since November 2007.  They are THROUGH with credit cards.

Good things this month

We transferred JC Penney balance which was 21.99% to a 2.9% on Discover AND we transferred Chase that was 26% to a Juniper Mastercard at 7.9%.  We were VERY excited about those transfers.

It is also very encouraging to see the balance on the National City card come down!! It won't be long until that one is GONE!

Challenges this month

Challenges this month have been the rising cost of gas and food, but we have just budgeted a little differently in some areas and made it work out fine!  Again, this month I have to say THANK GOODNESS for the budget form!!! We were able to pay cash for all back to school items this year and MAN! Does that ever feel good!!!

Updated Debt Freedom Date …

Month By Month Progress …

Sangl Says …

It is so nice to see Couple #3 reap the rewards of the hard work they put forth to restructure their debt.  Look at the tremendous progress they are making.  Instead of twenty percent of their payments going toward principal and eighty percent to banks, they have switched it around.  Now, over 80% of all of their payments are going toward principal reduction!  AWESOME!

Readers …

If you have debt, have you considered restructuring it?  This can really help your debt freedom march gain a ton of traction and speed up your journey to ZERO DEBT!  I encourage you to read the series of posts I wrote called Restructuring Debt.

My book, I Was Broke. Now I'm Not, is available via AMAZON.COM, BORDERS.COM, and PAYPAL.  You can read the Introduction HERE.  In this book, you will learn exactly how Jenn and I became debt-free in just fourteen months.