Topic: Upside Down Major

[mmret]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Its amusing how something as prosaic as a car can bring out all sorts of social commentary.

[Arctic_White]

The joys of the clueless....do you laugh at their stupidity or cry over the fact that we will end up paying for their mistakes. 

I fail to understand how we, as tax payers, will end up paying for his mistake.  If he's on welfare then yeah, I get it.  But this is just a car loan.  ??

[rrocket]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Sounds like easiest most cost effective solution is for the woman to learn to drive a stick.  Problem solved.

[Cord]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Sounds like easiest most cost effective solution is for the woman to learn to drive a stick.  Problem solved.

Thanks Dr. Phil. 

[Snowman]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Agreed on the note to parents but one should also add another note to sons out there, always wear a condom and make sure its one of yours.

[quadzilla]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Agreed on the note to parents but one should also add another note to sons out there, always wear a condom and make sure its one of yours.

Adding.....Make sure you bring your own condom, you never know how crazy she is as she could have already poked a hole in it.

[mmret]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Agreed on the note to parents but one should also add another note to sons out there, always wear a condom and make sure its one of yours.

Adding.....Make sure you bring your own condom, you never know how crazy she is as she could have already poked a hole in it.

And dispose of it. Ensure no viable genetic material can be recovered from it.

[Gurgie]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Ouch!!  tough spot to be in, take such a HUGE hit in that first year or two!!  My Sister looked at trading in her Sorrento last year after only 2yrs of ownership, dealer was more than happy to work with her to make it happen... brother in law looked over the numbers, texted me to ask me my opinion... Sister got new snow tires instead for her FWD Sorrento, instead of a new AWD Sorrento... brother in law couldn't stand to be upside down, even at 0%!!

Wonder if she could sell the car privately & get at least $5k more?  And then still have to pay off the $13k somehow... and just buy at $5k car to get thru the next couple of years

[mmret]

You know this concept of specifically not wanting to be upside down makes me wonder. I'm not sure such a fear is actually rational.

If someone is willing to underwrite a loan to you on collateral that is worth less than the loan amount, then some part of the loan is effectively unsecured. As a borrower, not having to put up any collateral is a good thing all else equal.

Oh, but you don't want to owe more money than your car is worth? Well your car is worth whatever it is and that's irrespective of the loan balance. Whether you sell the car or not, its market value plunges as soon as you drive off the lot.

Oh, insulted by the dealer's bid for your car? That's just transaction costs and the margins involved in running a dealership. A cash buyer would face the same issue.

Oh, don't like increasing your outstanding loan balance because of interest costs? That's a fear of interest, not a fear of an poorly-collateralized loan. If you really are getting a "0%" loan then is this really an issue?

Oh, don't like owing money? Well that's a fear of debt. Its not the same thing.

I mean how would you guys feel about a car loan where you have to pay an accelerated payment that covers depreciation - ie: higher payments up front, and lower payments later on? This would help ensure that your collateral is not worth less than the loan balance. How's that sound?

Uncollateralized or poorly collateralized loans are, again all else equal, crappy for the lender, not for the borrower.

I think people make some awful decisions by somehow not separating the asset and the liability properly.

[OliverD]

You know this concept of specifically not wanting to be upside down makes me wonder. I'm not sure such a fear is actually rational.

If someone is willing to underwrite a loan to you on collateral that is worth less than the loan amount, then some part of the loan is effectively unsecured. As a borrower, not having to put up any collateral is a good thing all else equal.

Oh, but you don't want to owe more money than your car is worth? Well your car is worth whatever it is and that's irrespective of the loan balance. Whether you sell the car or not, its market value plunges as soon as you drive off the lot.

Oh, insulted by the dealer's bid for your car? That's just transaction costs and the margins involved in running a dealership. A cash buyer would face the same issue.

Oh, don't like increasing your outstanding loan balance because of interest costs? That's a fear of interest, not a fear of an poorly-collateralized loan. If you really are getting a "0%" loan then is this really an issue?

Oh, don't like owing money? Well that's a fear of debt. Its not the same thing.

I mean how would you guys feel about a car loan where you have to pay an accelerated payment that covers depreciation - ie: higher payments up front, and lower payments later on? This would help ensure that your collateral is not worth less than the loan balance. How's that sound?

Uncollateralized or poorly collateralized loans are, again all else equal, crappy for the lender, not for the borrower.

I think people make some awful decisions by somehow not separating the asset and the liability properly.

Some good point there. I would add that the desire to not be upside-down on a loan may be based on the realization that if your situation changes and you need to get rid of the car (whether because of job loss, job change, new addition to the family, etc), it makes it easier to get out of that vehicle.

I think it's pretty funny when you see ads on Kijiji for cars that are 1-2 years old and the price is clearly based on what they owe. So they're basically asking around sticker price for a used car because they've only paid off the tax portion.

[tpl]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Sounds like easiest most cost effective solution is for the woman to learn to drive a stick.  Problem solved.

Maybe if the guy had managed not to commit an offence that caused his licence to be taken away...  I wonder if he lost his job because he no longer had a licence.

[aquadorhj]

First thing this morning I have a nice Mitsu Evo to appraise. Base but nice car, 21000 km. Trade value: $30,000. Amount owing $48,000. Customer has owned it for two months.

The back story is worse than the facts: Boyfriend convinces girlfriend to trade in her SUV (don't know what), and co-sign the loan to buy Evo. Boyfriend loses his job, loses his driver's licence. girlfriend can't drive the manual trans Evo, and is now pregnant. Girlfriend's parents knew they'd be upside-down and were prepared to kick in a couple thousand. Massive stress inducing reality check for all involved, except me of course. 

Note to parents: I have seen variations on this story play out many times over the years. If you have daughters, somehow beat it into their heads that they must never, ever co-sign for anybody's loan, especially a boyfriend's. And if you have sons, teach them not to be a worthless piece of chit that has to sponge off their girlfriend.

Sounds like easiest most cost effective solution is for the woman to learn to drive a stick.  Problem solved.

Maybe if the guy had managed not to commit an offence that caused his licence to be taken away...  I wonder if he lost his job because he no longer had a licence.

true.

Evo can easily facilitate that, i imagine.

[Triple Bob]

I have a harder time understanding why, if people owe money on a car, why that don't just suck it up a drive it until they're in the clear?

Some people feel the need to change quicker, I always feel that just because I love cars.  Others just fall into hardship, either through their own fault or not.

I understand there are some true idiots out there when it comes to financial decisions, but members of this board talk as if they have never experienced hardship (and some may not have), or made a bad choice, it's bizarre.  Personally I have made good and bad financial decisions, and like everyone above, I only hold myself accountable, no one else.

But I have also taken some risks at times when even the slightest misstep would have seen me in a much bigger financial hole, but luckily for me in time those risks went away, which was how I planned it.  But it doesn't always go to plan.

You've got to remember (and this isn't directed at you Vman), many people are fortunate enough to have family support to buy their first house, or car, or look after kids, or whatever.  They have a leg up from family/parents when starting out, which massively helps out in the long run.  Others have none of that support at all, which makes smaller house deposits and longer car payments a reality rather than a poor choice.

Again, this doesn't negate stupidity.

[OliverD]

I understand there are some true idiots out there when it comes to financial decisions, but members of this board talk as if they have never experienced hardship (and some may not have), or made a bad choice, it's bizarre.  Personally I have made good and bad financial decisions, and like everyone above, I only hold myself accountable, no one else.

I've made plenty of poor financial choices.

[Sir Osis of Liver]

I wish mining got bailouts.

That was sorta my point.  No problem spending billions for 10,000 GM employees.

Kinda makes $2 billion to the oil industry seem stingy in comparison, eh?

$2B a year, that covers off the auto bailout every few years. And it's money going to an industry that's hugely profitable. It's a complete waste of money.

If $2B a year in subsidies were going to renewables, we'd be a long way to generating as much wealth from that industry as currently generated from fossil fuels.

The mining industry is hugely subsidized in that they get off scot free from environmental cleanups. They just fold up shop and let governments deal with tailings.

[Guy]

I wish mining got bailouts.

That was sorta my point.  No problem spending billions for 10,000 GM employees.

Kinda makes $2 billion to the oil industry seem stingy in comparison, eh?

$2B a year, that covers off the auto bailout every few years. And it's money going to an industry that's hugely profitable. It's a complete waste of money.

If $2B a year in subsidies were going to renewables, we'd be a long way to generating as much wealth from that industry as currently generated from fossil fuels.

The mining industry is hugely subsidized in that they get off scot free from environmental cleanups. They just fold up shop and let governments deal with tailings.

Agreed, there were much talk of the QC government subsidizing the Asbestos industry in QC many years ago; even though the writing on the wall was very clear that Asbestos was going nowhere..

Times they are changing and at an ever increasing rate.. Some have difficulties seeing that.

[mmret]

Times they are changing and at an ever increasing rate.. Some have difficulties seeing that.

Politics only works on a 4 or less year timescale. Not too much changes there.

[revalations]

Way back when I worked in lease renewals at Ford, I had a guy come in with a 97 Windstar. Out on a 24mth lease with a mileage allowance of 12,000 km/year. He bought it out at lease end for ~$19,000 because he was over his mileage by 186,000 kms. He was commuting from Calgary to Red Deer DAILY. About a month later He was back, the windbucket blew a rod and he needed a new car.

The van was worth nothing, I think the manager put $500 on it. He went into a F150 that were leasing out at $399 per month at the time (yes...He leased again) He put about $7K of the "upside down" into the new loan, then paid the remaining $11,000 with His Visa card.

[Cord]

I mean how would you guys feel about a car loan where you have to pay an accelerated payment that covers depreciation - ie: higher payments up front, and lower payments later on? This would help ensure that your collateral is not worth less than the loan balance. How's that sound?

Sounds so sensible. Trouble is people don't want that. In fact what they want is the opposite. No payments for 3 months, Pay only half your payments for the first year, No interest for 6 months. This is the kind of thing people respond to.

All car loans are open so that people can always pay more than their required payment. But other than six people on this forum, no one does that.

[Snowman]

I wish mining got bailouts.

That was sorta my point.  No problem spending billions for 10,000 GM employees.

Kinda makes $2 billion to the oil industry seem stingy in comparison, eh?

$2B a year, that covers off the auto bailout every few years. And it's money going to an industry that's hugely profitable. It's a complete waste of money.

If $2B a year in subsidies were going to renewables, we'd be a long way to generating as much wealth from that industry as currently generated from fossil fuels.

The mining industry is hugely subsidized in that they get off scot free from environmental cleanups. They just fold up shop and let governments deal with tailings.

Been a long time since that as happened as companies are now required to provide financial assurance in the form of a deposit or bond to governments and communities as a guarantee that the resources to meet closure requirements will be available.