Living Car Free - Going car-lite... ethical question

Our family has gone through some really hard times the last several months. We have a family van and I have a truck I bought new a few years ago. We've been going through some financial couseling and it was suggested that I sell the truck to free up some cash and pay off the loan. My wife and I have been talking about going car-lite for a while since I can ride to work most days.

Here in lies my problem... my truck is worth less than what I owe!! Even if I manage to sell it, I would still owe money which is contrary to what I am trying to accomplish. I've thought about calling up the bank and telling them to take the truck back. My credit is already trashed as we went into foreclosure but we were able to pull out of it. We are trying to simplify our lives, so my credit rating to a moot factor at this point.

So what would you do??

Personally, I'd first consult with a bankruptcy attorney and get a professional opinion about the situation. He/she should be able to outline the options and explain your legal rights. So I'm voting "Other".

"give the truck back to the bank"....

Quick trying to sugar coat it and pay your debts.

I'd do whatever resulted in the least amount of debt by the end of the year. I'm currently going through the hassle of managing three cars, and if it were up to me, I'd sell or give away two of them immediately, just to have them out of my mental space.

Even if you turn it back to the bank you will more than likely be liable for the difference between what you owe and what they can get out of it. Sell it and you will reduce your overall debt, even if you still owe a difference. Problem is I doubt you can sell it, I know I would not buy a vehicle that still had a lien against it.

Aaron:)

Sell the truck privately so to can get met cash for it. The other alterntive is to give it back to the lending company. It's a quicker way of gettng rid of unwanted burdens, though to will get more o eu if you sold privately, it would take longer. Good luck.

Give the thing back.

BTW....Good luck.

Our family has gone through some really hard times the last several months. We have a family van and I have a truck I bought new a few years ago. We've been going through some financial couseling and it was suggested that I sell the truck to free up some cash and pay off the loan. My wife and I have been talking about going car-lite for a while since I can ride to work most days.

Here in lies my problem... my truck is worth less than what I owe!! Even if I manage to sell it, I would still owe money which is contrary to what I am trying to accomplish. I've thought about calling up the bank and telling them to take the truck back. My credit is already trashed as we went into foreclosure but we were able to pull out of it. We are trying to simplify our lives, so my credit rating to a moot factor at this point.

So what would you do??

If the purchase was over something like 910 days ago bankruptcy may release you from the debt. Either way I would give it back. Survival comes before my credit rating, your not alone on the money issues.

You probably won't be able to sell the truck unless you can make up the difference you owe at the time of the sale. If you can't do it then the point is moot.

If you think you have a chance to sell it for the amount owed then advertise it on Craigslist for a little more than you owe. If someone offers you a little less, and if it is within reason accept the offer. Make up any difference at the time of the sale at a title company office. Craigslist advertising is free.

Is the van in better shape than the truck? Is the van worth more than you owe on the truck? If you and your family can fit in the truck then sell the van and use that money to pay for the truck. If you must keep a motorized vehicle you should try to keep the one that is in better condition.

Maybe you could sell both the truck and the van and use that money to pay the truck debt. Then get a small used car for the family. Just start selling stuff and get as much money for your family as you can.

Read the How Simply Do You Live thread and get an idea of how some people live well with fewer things. Maybe your family already lives that way. I found the thread inspiring. Perhaps your wife would too.

Sell the BMX bike "newest toy" too.

From what I've read on automotive forums when people give a vehicle back to the bank the bank sends it to auction and it could potentially go for a lot less than what you owe so you may get stuck with a large bill.
There could also be issues with selling a vehicle you still owe to a private party since you would have to get a bank to loan you the difference but now you have an unsecured loan since you won't have the vehicle.

You first need to find out what would really happen if you ask the bank to repossess the truck. I doubt that they would simply accept the truck as payment of the loan. More likely is that they would sell the truck very cheaply at some bulk vehicle auction, subtract from the proceeds any costs associated with repossessing the truck, transportation, storage, cleaning/refurbishing, etc. Then they could still come after you for the remaining balance of the loan minus whatever might be left of the auction proceeds.

Worst case, the bank may end up claiming you still owe almost as much as you do now - but you wouldn't have the truck. If at all possible, sell it privately for the highest price you can get (do any needed cleanup and repairs yourself) and come up with sufficient funds to pay off the loan.

"give the truck back to the bank"....

Quick trying to sugar coat it and pay your debts.


+1 pay up buddy.

It's a tight spot you're in and a painful lesson.

Your credit is trashed and you are going to owe at the end of this. Those are given. The question is how to minimize what you owe.

I agree with other posters that if you just give the car back to the bank, the bank will do what is best for the bank, which is likely to dispose of the car and have you owe the rest. So it's really not in their best interest to get the best price for the car to minimize your debt.

But it is in their best interest to get as much of the debt paid off as possible. If you collapse on them, they won't get anything. So talk to them, they may be willing to work with you. They may even help you improve your credit rating and make it easier for you to pay it off.

I'm guessing that you will probably get the most doing a private sale. It may take the most time and work, but still get you the most return.

The bright spot is that this lesson will stick with you like peanut butter on the roof of your mouth and motivate you strongly to get the debts paid off, savings in the bank and an improved cash flow.

I've been behind on debt. As I began to get it paid off, bill paying became fun actually, to see my debt going down and then go away. It wasn't the screaming agony that it was when I was getting more in debt.

My bicycle was a big part of recovering from debt. Just riding cut costs, but it also encouraged a leaner lifestyle since the expensive things like the mall, and events were farther away and harder to get to. I'd also think twice about getting extra groceries since they wouldn't fit on the bike.

Good luck and a good financial recovery.

NEVER GIVE THE VEHICLE BACK.....that's just horrible advice, and you'll get shafted so hard that not doing anything and simply paying for the vehicle you can't afford would be a better decision in the end.

The best option is selling the vehicle off privately, then paying the full loan off ASAP....sell whatever you have to for this to happen. If you default when someone else owns it, you can expect not just civil issues, but possibly criminal issues as well....so pay it off quickly.

(edit): by the way, the only wsay to get upside down on a car purchase is to have the loan extended to reduce monthly payments (depreciateion exceeding rate of payment). If you cannot afford the car under a normal duration loan, don't buy it. I know it may sound harsh, but this is one of those rules that if followed, you're pretty much ready when the crap hits the fan.

NEVER GIVE THE VEHICLE BACK.....that's just horrible advice, and you'll get shafted so hard that not doing anything and simply paying for the vehicle you can't afford would be a better decision in the end.

The best option is selling the vehicle off privately, then paying the full loan off ASAP....sell whatever you have to for this to happen. If you default when someone else owns it, you can expect not just civil issues, but possibly criminal issues as well....so pay it off quickly.

(edit): by the way, the only wsay to get upside down on a car purchase is to have the loan extended to reduce monthly payments (depreciateion exceeding rate of payment). If you cannot afford the car under a normal duration loan, don't buy it. I know it may sound harsh, but this is one of those rules that if followed, you're pretty much ready when the crap hits the fan.

IMHO most cars loans go upside down pretty quickly due to accelerated depreciation...look at the dump in market value of SUV's when gas peaked at around $4 a gallon. Even with a 20% down payment and a 48 month loan people were upside down. Also rolling over old loans into a new loan will get you upside down pretty quickly.

FWIW I typically pay cash for a gently used vehicle rather than buy new, the greatest deprecation of most new vehicles is in the first year or two, then, unless there is outside influence it pretty well stabilizes over the remaining life of the loan. Best bet is to pay cash or take out a very short loan and DON'T BUY NEW! Let someone who can afford it (or thinks they can) take the depreciation hit.

Aaron:)

I think you should study up on personal financial planning. It may be time to see a credit counselor or even a bankruptcy lawyer.

If at all possible, a great way to spend less money is to go totally carfree. Even with a young family, this might be practical depending on where and how you live. Continue to read through this forum and check out some of the good books about carfree living.

How to Live Well Without a Car (http://www.randomhouse.com/catalog/display.pperl?isbn=9781580087575)
Divorce Your Car (http://www.newsociety.com/bookid/3683)

From what I've read on automotive forums when people give a vehicle back to the bank the bank sends it to auction and it could potentially go for a lot less than what you owe so you may get stuck with a large bill.


Bingo.

But talk to someone who really know's there stuff before doing anything.

Though for the time being, look into selling the truck. See what it'll fetch on Craigslist or Ebay.

About 5 years ago, I sold a truck that I still owed money on. It's awkward not being able to give the new buyer the title right away, but if you're willing to do a lot of extra legwork, and to sell the truck for a little bit less, it can be done. I had the title in the new owner's hands in a matter of weeks. Of course, you'll still owe some money for a while, but it's better then any of the alternatives.

BTW, being car-free, it's way more fun not having to deal with stuff like that any more... as long as I live in a big city, which is highly likely, given my job, I will never, ever own a car again. It's just lot easier not to have to bother with that nightmare.

IMHO most cars loans go upside down pretty quickly due to accelerated depreciation...look at the dump in market value of SUV's when gas peaked at around $4 a gallon. Even with a 20% down payment and a 48 month loan people were upside down. Also rolling over old loans into a new loan will get you upside down pretty quickly.

FWIW I typically pay cash for a gently used vehicle rather than buy new, the greatest deprecation of most new vehicles is in the first year or two, then, unless there is outside influence it pretty well stabilizes over the remaining life of the loan. Best bet is to pay cash or take out a very short loan and DON'T BUY NEW! Let someone who can afford it (or thinks they can) take the depreciation hit.

Aaron:)

Pickup trucks rarely depreciate like that though...unlike SUVs, more people buy trucks to use them rather than to poke around in a titanic vehicle. This helps keep any truck that's a proven brand (Ford especially, then Chevy/GMC, then the rest) in a decent resale bracket.

Anyways, if it can't be paid off in 4 years, it shouldn't be bought....if it depreciates so much in 2-3 years that you're upside down, you bought a really horrible vehicle. Nissan Titan comes to mind (no offense to those that own them, they look nice, have good power, but the drivetrain just can't handle what a equally powered American Truck can...it just isn't competitive in it's price/performance bracket, thus not on the list for those that want a work truck, which is the people most likely to pay top dollar, as it's a write-off anyways).

Pickup trucks rarely depreciate like that though...unlike SUVs, more people buy trucks to use them rather than to poke around in a titanic vehicle. This helps keep any truck that's a proven brand (Ford especially, then Chevy/GMC, then the rest) in a decent resale bracket.

Anyways, if it can't be paid off in 4 years, it shouldn't be bought....if it depreciates so much in 2-3 years that you're upside down, you bought a really horrible vehicle. Nissan Titan comes to mind (no offense to those that own them, they look nice, have good power, but the drivetrain just can't handle what a equally powered American Truck can...it just isn't competitive in it's price/performance bracket, thus not on the list for those that want a work truck, which is the people most likely to pay top dollar, as it's a write-off anyways).

Hyundai and Kia depreciate very quickly and are often "upside down" loans but they are some of the best cars on American roads. They are more reliable than American and European cars and almost as much so as Japanese brands. I dont think they are "horrible" vehicles. Depreciation is based on "precieved" loss of value not actual loss of function or usefullness.

While what you said about Trucks Vs. SUVs is true trucks still depreciate much faster than most cars. Also, being from a rural town I knew LOTS of people who owned trucks who did jack and squat with them and their "towing capacity." They just liked the looks or it made them feel rugged or whatever, I cant pretend I understand why they drove them.

Why pay any amount of money for a new car that will be worth such a small fraction of its original price after just a few years, be it a truck, SUV, or car? To me it makes sense ONLY if you plan on keeping the vehicle till the wheels fall off in which case reliability and economy should be high on your list of features. Hyundai, Kia, Honda, Toyota. If I remember right the most reliable vehicle according to Consumer Reports for the last two years was the Hyundai Sonata but I have not been a CR member for a while now so maybe thats changed.

Many good points there, but the import vs american reliability is a myth. If you look at the care taken in total dollars over a 10 year/150,000mi ownership span from new to then, american cars cost just as much as imports. Those quality figures most people use are actually initial quality, which is more or less a gague of fit/finish and reliability in the scope of a typical lease duration.

There are people that buy trucks to look macho, but those are the minority...SUVs tend to be the opposite. Anywho rural areas and trucks go hand in hand...part of it is that depreciation value you mentioned....it's not SUV bad, but it is more than a car. Part of that is as the years go by, the truck bed will start to rust, tailgates will need repaired/replaced, etc. Trucks are ultility vehicles, and built for such use....to make things worse, the average selling price of fleet vehicles goes into the "book values", which means that your vehicle's value is being based on fleet vehicles which are nowhere near the same condition.

However, a good 2500 or 3500 chevy, ford F250 or F350 will have pretty low depreciation rates as far as trucks go....those are proven workhorses, and people pay good money for them because with maintenance, they are incredibly cheap to operate...700,000mi out of a 3500 is not unreasonable....it may involve an engine swap, but that's just par for the course on any automobile with that kind of mileage....at those mileages, you're looking at chassis wear more than anything.

Part of the resale value issue is people are replacing cars faster than ever...what ever happened to buying a car, driving it for 8-10 years then replacing it? Actually....what happened to cars that don't fall apart on year 6?

For the record....I've yet to have seen a happy Kia owner. Hyundais...some are rather good, Toyota....they actually had a major fiasco a while back wherre they cheated the JD Power figures by issuing TSBs instead of recalls....this made a reliability figure that was below Chrysler look best in class (since there were no adavertised firings over this, it's prudent to consider their reliability average until a vehicle platform has proven itself over at least a 5-year period). Given Chrysler's issues was mostly due to mechanics doing the wrong things (like the infamous Dexron instead of ATF+3 fiasco when the solenoid actuated fully-hydraulic transmissions came to market in the early 90s, which was also in part due to someone at Chrysler putting incorrect info in the owner's manual too).

We can go on and on about it....I just don't like misconceptions about cars. Truth is the overall brand reliability figures are within single-digit percentages of each other. It's just people seem to reinforce their opinions by only remembering stuff that corresponds with it, instead of looking at the whole pie. Even Toyota has made some outright horrible cars in the past....and some unlikely companies have produced good cars as well.

Where's the ethical part? I know some people consider driving around in a car un-ethical, and some people consider declaring bankruptcy un-ethical. But in the US those are both part of "The American Way". Recently the Bush admin made individual bankruptcy more difficult but still what's good for GM is good for the country right? I agree with Roody.

Also, here in DC people drive around in trucks for the macho image. They have cushy office jobs. All you have to do is look in the bed and hitch to see that they don't use them. They could easily rent one for the few times they use the bed or towing ability. A computer programmer friend who drives a big truck also rides around the bike paths on a mountain bike with huge knobby tires.

I have a truck...in fact we have several that we use on the farm and for other work. I was driving a 1997 F150 V-6, ran that truck well over 300,000 miles between 1999 and 2006. It was replaced by a extremely low mileage 1996 F350 diesel, that truck currently has ~138,000 miles on it. It has shed ~ 1/3 of it's purchase value in the past 3 years. It is currently for sale because I don't seen a need for in the future. I saw a similar 2003 truck with ~150,000 miles on it currently listed for less than half of the original sticker price.:innocent:

My philosophy is to buy good, clean, used (not always easy with trucks) and run them until the wheels fall off, about the same way I do my bicycles. However my mechanical things do not get abused, they get used and properly maintained. If something isn't being used, it gets sold...except bicycles.:D

Aaron:)

Quick trying to sugar coat it and pay your debts.

Hey, the bank agreed to the terms of the loan. If he can have the truck repossessed and have his debt forgiven at the same time (consult an attorney), then the bank KNEW what they were getting into.

I would do whatever gets you out of debt the fastest. I have never had a car loan, and therefore am very unfamiliar with debt forgiveness as it relates to them.

Hey, the bank agreed to the terms of the loan.

Thats the key, the bank would have given a few pages of fine print telling the penalties for turning the vehicle back in early. There would have been an amortization schedule telling how much is owed each month and that if they take the vehicle back it will be sold at auction and the loane will still be responsible for the difference.
I looked at this a while back when I got laid off. I found a new job but health insurance tripled in price so I was looking at how to reduce debt. I found I was better off keeping the vehicle/loan rather than trying to sell it and having to come up with the difference because a shorter term unsecured loan would end up having about the same payment per month.
I gathered up anything I could find that I could live without and ebay'ed it and got enough to pay off a couple of my school loans, then found a very part time job with a computer consulting company where they would call me on occasion to cover when they had too many jobs for their normal employees so it was just a small job or two a month but gave me about $150-200 a month that I could throw at my other school loans and I ended up paying them off every month or two until that $200 a month bill was gone then started on the smaller credit cards.