Seeking auto repossession guidance

[gak555]

Hi All,
Here is the deal. My chapter 7 discharge went through in October 2007. I did not reaffirm my car loan, but have been making regular payments. I've continued to make the same payments, including interest from the original loan which was at 5.99%. My car is a Mazdaspeed gas guzzler. I have given thought to stopping the payments, letting them repossess and then buying a honda fit or some other gas sipper. I know the interest would be much higher. I'm wondering approximately how many payments does one have to be behind before the car company starts repo proceedings. Also, do they just come in the middle of the night and snatch it with no notice.
This whole thing is a world I know nothing about. Also, is this a good idea to begin with ? The car payments have already been dismissed in the chapter 11. And finally, are there any other alternatives ?

[Lacy]

I dont know the answers but curious to know the answers to some of your questions myself. Being I am in a simaliar situation myself.

So hopefully someone here will have the answers to your questions.

[keepmine]

Do you have any equity in the Mazda? If so, sell it yourself or, use it as part of a trade in.
Technically, they can repo it the day you default. Likely, you'll need to miss a couple of payments before they send the hook. For sure, don't leave any valuables in the car if you default.
You can also call and tell them your intentions and make arrangements to surrender the car.

[gak555]

No equity in the vehicle.

[keepmine]

One thing you need to consider is, that 5.99% verus, a much higher interest rate. Will you really save any money when, you also factor in the fast depreciation if you buy a new car?
It may make sense to just stay with what you got.
How many payments left?

[BKParalegal]

I am dealing with this in my office almost daily. Here is a bit of reality. A Honda Fit gets around 27 mpg. Your Mazda whatever, gets 18 mpg(Pure guess but I am going low for this example) that is a net saving of 9 mpg if you were to buy the Fit. Now, lets say gas stay at $4.00 a gallon and you drive 60 miles round trip a day. Your savings comes to $4.44 a day or $133.20 a month. The difference between financing a $16,000 car for 60 months at 5.99% to 16.99% is roughly $90 a month more. This gives you a net savings of maybe $45 a month, not factoring that you will be paying longer on a new car, and that insurance goes up. What I am trying to say, is that I have way too much time on my hands to sit here and figure this thing out, but I am waiting for my bbq grill to heat up.

Good Luck

[Keebler]

I am dealing with this in my office almost daily. Here is a bit of reality. A Honda Fit gets around 27 mpg. Your Mazda whatever, gets 18 mpg(Pure guess but I am going low for this example) that is a net saving of 9 mpg if you were to buy the Fit. Now, lets say gas stay at $4.00 a gallon and you drive 60 miles round trip a day. Your savings comes to $4.44 a day or $133.20 a month. The difference between financing a $16,000 car for 60 months at 5.99% to 16.99% is roughly $90 a month more. This gives you a net savings of maybe $45 a month, not factoring that you will be paying longer on a new car, and that insurance goes up. What I am trying to say, is that I have way too much time on my hands to sit here and figure this thing out, but I am waiting for my bbq grill to heat up.

Good Luck

Another thing to consider is the months at the end of your current loan where you'll be done making payments. With a new loan you'll almost certainly be making payments longer because the new loan starts over at payment #1. So, while you're paying less per month with the new car you're probably making payments longer than you would have. The only right way to compare the monthly savings is to assume the term of your new loan matches the remaining term on your old loan so you actually compare apples to apples.

The other consideration is that your fuel expense is proportional to how much you drive. The new car trades money you spend on fuel for money you'll spend on the payment. If something bad comes up financially you have the choice of spending less on the old car by leaving it parked. With the new car, you need to make that extra payment whether you are driving it or have it parked. In this regard a paid-off car that gets 9 MPG would help you more if you become unemployed more than an economy car that requires monthly payments. If there's anything uncertain in your future you might consider erring on the side of flexibility.

[dragonnfly]

Can you go and purchase another car now while you are still up on the payments so your rate wont be so high? Then maybe try to sell the Mazda? How upside down is it?