Car repossession question

[Scroopy Noopers]

Whoa, nuking your credit over a Kia. Yikes.

[llwhiteoutll]

Originally Posted by Scroopy Noopers

Whoa, nuking your credit over a Kia. Yikes.

That’s why I asked the scam question.

Underwater on your current vehicle, roll the negative equity into a new vehicle, collect the cash back and let the current vehicle get repo’d without making any real payments. Bonus points if you had both vehicles in a single person’s name and only their credit gets nuked.

[Fuzz]

Is this a thing people do? Roll an $8000 cash loan into a depreciating car loan? No wonder there a debt problems...

[burn_this_city]

Nuking your credit for $8k, sounds about right for dumb people.

[llwhiteoutll]

Originally Posted by Fuzz

Is this a thing people do? Roll an $8000 cash loan into a depreciating car loan? No wonder there a debt problems...

Not only that, but they roll negative equity in a car into a new car loan. Sometimes more than once.

[bagofpucks]

Yes, these folks are about as financially literate as the situation sounds, so no scam possibilities.

They are like a lot of people and just don’t understand that just because they want the newest shiny toy doesn’t mean you can afford it.

[Weitz]

These days how badly would that nuke your credit? Especially if you have a good job?

[powderjunkie]

Next step:

[Scroopy Noopers]

Originally Posted by Weitz

These days how badly would that nuke your credit? Especially if you have a good job?

Not that long if you stop being an idiot.

[OMG!WTF!]

Originally Posted by Weitz

These days how badly would that nuke your credit? Especially if you have a good job?

6 years I think.

[Reggie28]

If you are already underwater and some banker is going to give you a new car and eight grand in cash, take it. The banker is the idiot.

[Deegee]

Originally Posted by OMG!WTF!

6 years I think.

Correct.

Your friend needs to review the documents of the credit agreement.

Conditional sales contract? Likely they can't sue for the difference.

Loan Agreement with a financial institution likely means they can.

For my source, I have managed a financial institution for years.

[Deegee]

Originally Posted by bagofpucks

Sorry, the $8K cash back was just added to the car loan and they got the $8K in cash. When I bought a car earlier in the year the dealerships were really pushing the cash back piece of financing. It makes no sense to me, but apparently it appeals to some folks.

They likely get paid a higher brokerage/reserve for higher lending. I haven't seen that side of the business for some time, but that used to be the case.

[Scroopy Noopers]

Originally Posted by OMG!WTF!

6 years I think.

The mark will be there yes (I actually thought it was longer). But you can fix your credit score much faster.

[blankall]

In their defence the cash back is typically not part of the loan. It comes from the manufacturer, and you don't have to put it towards the vehicle, although it's typically a good idea.

[bagofpucks]

Thanks all for the additional information!

Interestingly, the debt is with a bank and they have said they will be coming for the full amount. The person who picked up the vehicle said they didn’t have to worry due to the sue or seize rules. So, they are getting a lot of conflicting and bad information and frankly they aren’t the best listeners or readers when it comes to details. They also have a lawyer friend looking into the contract and he has given them some false hope I think.

Crazy enough, they’ve already been back to another dealership and are back financing a used vehicle, so I can only imagine what their interest rate would be.

[llwhiteoutll]

Lol, Jesus Christ. Some people are just too dumb to have money. I’m guessing that buying an older car with cash never occurred to them? You know, instead of taking a third kick at the financing can, but with interest rates probably in the double digits this time

[Fuzz]

Ya, a $5000 Civic the first time around would probably have served them well, and kept them out of this debt hellhole.

[Jason14h]

https://www.google.ca/amp/s/www.cbc.ca/amp/1.4863737

Article is a bit older, but It highlights the issues Canada will be facing

[blankall]

Originally Posted by bagofpucks

Thanks all for the additional information!

Interestingly, the debt is with a bank and they have said they will be coming for the full amount. The person who picked up the vehicle said they didn’t have to worry due to the sue or seize rules. So, they are getting a lot of conflicting and bad information and frankly they aren’t the best listeners or readers when it comes to details. They also have a lawyer friend looking into the contract and he has given them some false hope I think.

Crazy enough, they’ve already been back to another dealership and are back financing a used vehicle, so I can only imagine what their interest rate would be.

If it was just a straight line of credit with the bank then they wouldn't be a able to repossess without security. Pretty sure the seizure or sue rules would apply as it will fall under the PPSA.

I don't get how they couldn't find a way to make a few more payments on the car but can make payments on the new car?