Expert: David - 3/14/2009

Question
I purchased a car 2 years ago and I was upside down at the time of purchase due to a trade in and being young with not very much credit at the time. The car is up to date on payments, but i have had several issues with it since purchase. I am also getting ready to have a little one and need a bigger unit, but again I am upside down. I was thinking of getting a new unit from a dealership and doing a vol repo on the one I have now. If i don't intend to buy a house within the next 7 years will the repo still have a serious impact on my credit? Do I have any other options to get a new unit without the vol?

Thank you so much for your time.


Answer
The only options involve selling it or trading it in @ a inflated value which is reflected on the selling price of the new vehicle.

As far as credit.  It will hurt for at least seven years.  Expect at least a 100 point drop in your score.  Don't forget that they will sell the car at auction and you will owe the difference between that price and your loan amount plus fee's and interest.

That amount will go into collections and will begin to grow with interest.  Then a judgement will be obtained and possible wage garnishment.

However you move forward I recommend that you stick to a vehicle that you can afford a 3 year payment schedule on.  That is usually the only way to stay on track with depreciation in case you find yourself in a tight spot again.

If the repo does happen and you have other negative items on your credit such as late pays, medical collections... you should get some help with it.  Visit www.financialscoringsolutions.com to start.

David McArthur
219-718-8566 - Direct Line