I owe $40,000 on a $25,000 car. I am upside down and want to get out of this vicious cycle. My payments are $775 a month and I have 5 years to go. Bad plan. I started this car hopping scheme several years ago and it hasn't caught up until now. I will end up paying over $48,000 over the next 5 years and throwing good money after bad. It has been suggested that I lease a car and roll the negative equity into the lease payment. The payment will be higher but I will at least be out of the lease in 36 months and out of the black hole of negtive equity and wasted money. What are your thoughts? Thanks so much.




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Assuming your $25k value is private party, the best way is to get a loan for the difference. Sell the car privately and buy a beater for $3k. You'll owe $18k but that's better than $40k.

The other option is to keep the car and pay as much as possible over your minimum payment. Sell things, work OT, cut your lifestyle (no eating out) until you get the amount owed equal to the value of the car.

Check out Financial Peace University.

Good luck!

I completely agree with Scoobs. This car is costing you WAY too much money that you clearly can't afford. Get rid of that beast and take the loss, but at least you won't owe the full $40k. Buy an old quality car like a small Toyota or Honda, and then work aggressively to pay off the debt you have.


Also, the important thing here is to learn the lesson to not lease cars, not buy more than you can afford (ideally you should be paying cash for used cars rather than buying new), and never roll negative equity into a new loan. This is painful but hopefully when you do the hard work and come out on the other end, you will be wiser.