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The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.
So what if you have a vehicle that you're having trouble keeping up with the payments on? Maybe you owe more than it's worth. A few years ago, it would have been easy to get out of that vehicle because you could sell it for more than your loan and just be done with it. But now that the used car market is changing, you may find that your loan exceeds the amount that the vehicle is worth, which means you can't get out from underneath it.
There may be ways around this. Every bank has different programs and policies for loan payment easing. You see on the screen here, we have a document from a credit union that has a loan forbearance program, payment deferral program, and many banks have this. Some banks also have very specific programs for vehicles where you can do what's called a short sale on a vehicle.
Short sales were very popular in the 2000s for Real Estate. If you had a house with a mortgage on it and the house was worth less than your mortgage, you could negotiate with the bank to sell it for market value and waive the difference. You can do the same thing with vehicles. Many banks have a specific formal program for it. Even the ones that don't, you can present to them a package of information and ask for a loan forbearance or payment deferral.
So let's say, for example, you have a vehicle you owe $18,000 on and it's only worth $12,000. If you can't afford the payments or don't want to afford them, and obviously, if you can't afford the payments, you also can't afford to come up with the $6,000 difference to cover the loan amount if you sold it. But what you could do is go to that bank with a certified appraisal or valuation for the vehicle, a description of the vehicle condition, mileage, a breakdown of your income, and tell the bank, "Look, the vehicle is worth $12,000. I owe $18,000. I would like to sell it for $12,000 and have the $6,000 waived."
If you are current on your payments, they may look at it one way; if you're late on your payments already, they may look at it another way. What you don't want to do necessarily is a voluntary repossession because if they repossess the vehicle, they'll sell it for $12,000, bill you for the $6,000, and put it on your credit. You want to negotiate.
You will be back in your video in just a few seconds. In the meantime, remember that actualhuman.com offers you live one-on-one private video consultation with an expert in this exact subject. We want to listen to your story, hear your questions, and give you expert advisement on your options. Now back to your video.
In advance that you are going to sell it for $12,000, handle that, and want them to waive the $6,000. Sometimes they might not waive the whole amount; they might waive part of it and allow you to make payments on the difference. For example, if you sell it for $12,000 and owed $18,000, they'll clear the title so you can sell it and give a title to the next buyer. They might say, "You need to pay $2,000 of the $6,000. We'll eat $4,000. You have to pay $2,000. Give us $100 a month for a year and a half." That's better than paying $700 a month for your car payment or $600 a month, and it goes away. Negotiate those terms in advance.
You will have the best chance of negotiating those terms if you have a very good vehicle valuation, a very good description of the vehicle condition, a description of your income, and also a very well-worded reason behind it. You're not just trying to get them to eat money because that's real money for them. If they lose that $6,000, it's like them writing a check for $6,000. They're losing it. Make sure you have a very well put-together package for this.
You can get more information from our website below. We even have consulting available to guide you through this process if you would like to make an attempt at it. One other note: Before you attempt this, get a lien release from that bank with no consequence. There's a package you can send to the bank asking just for a flat-out lien release. If you do it the right way, 30-40% of the time, you may just get a lien release and sell the car. The amount that you owed on your loan still might be collectible under your credit, but you could sell the vehicle and have the cash to maybe pay off some of the loan or pay the payments for a while.
Remember, we're not attorneys. We're not giving you legal advice, so take it for what it's worth. Use some of these techniques to help you maybe ease your financial burden from a car loan. In the last three or four years, many people got in deep on car loans. We've seen car loans with payments of over $1,000. That's a pretty heavy-duty monthly budget to have. That's what rent cost 10 years ago for a house.
If you have a vehicle or more than one vehicle that maybe you'd like to get out from underneath or maybe get something newer, look at this car short sale as a way to try to ease the burden of car loan payments to see if that'll help you out from a non-optimal, non-ideal vehicle ownership situation.
Thank you for watching another episode of Actual Human Advisory on Describe TV. Remember, we have live one-on-one consultation appointments available at actualhuman.com where you can book a one-on-one undivided attention live call with a licensed investigator, a licensed insurance broker, a licensed mortgage broker, real estate broker, I'm also a certified real estate title examiner, a certified civil court mediator, along with having developed and started over 15 businesses, several of which were sold for millions of dollars. So if you have questions in any of those categories, arrange a one-on-one live video consultation using the link below, and we'll see you on the next video.