Should we surrender car?

[DoOver]

Hello all. We had a bk7 discharge at the beginning of 2013. We thought we were reaffirming our truck but it turned out we didn't bc our atty didn't receive our docs (silly us didn't put enough stamps). About apnth after discharge, we received a letter from our lender stating they haven't received payment & were going to take back our truck (that's when we first realized it wasn't reaffirmed & was discharged in the bk). We've been making timely payments over a year now. We love the truck but don't like the $300/month payment. It's about a wash if we were to trade it in or even try to privately sell it.

So our question is: should we give back the truck and try to get something else? One of the biggest reason (other than high payment) is that the payments are not being reported so our credit scores aren't improving. We were thinking that if we got something else, at least it would help our credit scores. Any thoughts/feedback would be appreciated

And, if we do decide to give it back, what are the steps? Can we not pay for a month or two and wait for them to send us another letter saying their coming for the car? Or, do we need to call them and ask them to come get it?

TIA!

[TXskyblue]

I have two thoughts on this.

One is that I believe many people put an overemphasis on taking out new debt in a quest to improve their credit score, when what their credit needs most is time and what their finances need most is no new debt.

The other is that a vehicle loan today might be pretty expensive, APR-wise. What is your interest rate now? Have you shopped around to see what kind of interest rate you can get today? If you can get a better rate, why not just refinance the vehicle you have now?

[BobMango]

I agree with TXskyblue. Plus I'm wondering how much lower you think you can get a new payment? Even a cheap new car ($16,000) is going to push $300 a month at a reasonable rate (5%), and that's over 5 years. I suppose you could get a special lease deal in the $150 range, but then you are really just flushing that money away. If the vehicle is reliable I'd work something out with the lender and see if you can economize in other areas. The only other option I'd recommend (and many people are not willing to do this) is let the car go and get a reliable beater and save cash to be able to trade up later. I drive a '99 Ford Ranger that I bought for $1,500 four years ago. I figure I'm ahead by over $13K in car payments alone.

[DoOver]

Hi TXskyblue. Thank you for your honest feedback. I appreciate it :-) I thought that since we're already paying for the truck, why not get a loan that can also help improve our credit. Is that not a good option?

I haven't shopped around yet but started to this am. Thanks for the suggestion. Never considered refinancing. Talked to the loan dept with the bk discharge and they said that so far we "look good for a refinance" but that we have to go through the application process. I was thinking I might try our credit union and check their rates. Thanks again!

[DoOver]

I agree with TXskyblue. Plus I'm wondering how much lower you think you can get a new payment? Even a cheap new car ($16,000) is going to push $300 a month at a reasonable rate (5%), and that's over 5 years. I suppose you could get a special lease deal in the $150 range, but then you are really just flushing that money away. If the vehicle is reliable I'd work something out with the lender and see if you can economize in other areas. The only other option I'd recommend (and many people are not willing to do this) is let the car go and get a reliable beater and save cash to be able to trade up later. I drive a '99 Ford Ranger that I bought for $1,500 four years ago. I figure I'm ahead by over $13K in car payments alone.

Hi BobMango. Thank you for your input as well. Our interest rate is 6.69% w/3 1/2 years to go. We may be able to get maybe $100 after payoff if we were to privately sell. We definitely don't want to lease. We have 2 other good functioning cars without payments (but one is my sister's car that she's not using now). We were thinking of just surrendering the truck and not get another for a while and then getting one later when we need (this is our first choice); or, refinance (didn't consider until TX suggested it); or sell our other car & voluntarily surrender this truck and buy another more gas-friendly car with lower payments (to help improve our credit scores). Thoughts? Thanks again!

[LadyInTheRed]

I really think you should take the credit score factor out of your decision entirely.

If you decide to refinance, remember that you will be giving up a loan that you can walk away from at any time without consequence, except perhaps your ability to get a loan from the same lender. IMO, you'll need to have a significant interest rate reduction and/or reduction in the overall cost of the loan to make refinancing worth the risk.

If you don't need the truck and you can only sell it for $100 more than you owe, stop making payments and they will eventually come to get it. Save the money you've been spending on car payments and insurance for a down (or full) payment on another car when you need it.

[DoOver]

I really think you should take the credit score factor out of your decision entirely.

If you decide to refinance, remember that you will be giving up a loan that you can walk away from at any time without consequence, except perhaps your ability to get a loan from the same lender. IMO, you'll need to have a significant interest rate reduction and/or reduction in the overall cost of the loan to make refinancing worth the risk.

If you don't need the truck and you can only sell it for $100 more than you owe, stop making payments and they will eventually come to get it. Save the money you've been spending on car payments and insurance for a down (or full) payment on another car when you need it.

Thank you LITR! That's what I needed to hear - "take the credit score factor out of our decision" as it is one of the main factors; but as you and the others pointed out - shouldn't be.

We're thinking of using the truck to move and then give back. Didn't know we could just stop paying and cancel insurance until they come get it. We could totally save the money ;) So, there's no way they can come after us for not paying anymore since we didn't reaffirm, even though we've been paying all this time? How long do they typically take to come get the car? It's with Wells Fargo Dealer Services. Thanks again!