Buying a Car After Foreclosure

[caligirl]

As of July 08 I have to turn my leased Honda Pilot back into the dealer. We will owe approximately $7K due to over mileage. Our home foreclosed on 12/26/07 and we have been on a Debt Management Program for our credit cards since January 08. We have never been late on our car payment. My quesiton is...with a Foreclosure on our credit and being on a Debt Management Program do you think the dealer will work with us to roll the $7K into a new car/car payment. I want a cheaper commuter car (Honda Fit), so my car payment would probably end up being the same as we pay now.

[caligirl]

Anyone??

[Boscoe]

There is some risk for them, as I am sure you know.....How would you reassure them you would make these payments?

[caligirl]

There is some risk for them, as I am sure you know.....How would you reassure them you would make these payments?

How does someone with "good" credit reassure them? Don't they take a risk either way? Like I said, we have never been late on a car payment to them in almost 4 years...even through all this Foreclosure mess...wouldn't that be reassurance?

[HHM]

It's tough to say...personally, I think you are screwed.

But, given the downturn, and mad incentives, you might find someone to finance you, but realistically, trying to finance $7K of non-value equity, on top of taxes, title, doc fees, etc, is totally unrealistic. Even in the heyday of car finance, the MOST a finance company would do is 125% LTV on a new car finance contract to someone with IDEAL credit (which assumes some amount of manufacturer incentive to get the net LTV to 115%). So basically, you would probably have to buy a car with an MSRP of around $40K to carry that kind of non-equity balance ($7K in overage fees + tax + fees + docs + etc).

So, assuming you financed a TOTAL of $50K, and lets even assume you got a good rate, 5.99%, your payment would be at least $828 per month.

[wilbur4321]

If you buy your pilot at the end of the lease, doesn't that let you get out of paying the overage fees and other such crap? If I were you, I would try to negotiate that way -- lease to purchase conversion on the current car. Should have much lower payments than any other option. I understand wanting the better gas mileage, but paying $7k in fees and depreciation on another new car will be more expensive than the extra gas, most likely!

--randy

[caligirl]

Update:

We went into the dealership a month early so that we would know our options. We ended up going lease to purchase on the Pilot AND bought a commuter car (Honda Fit). Had NO problem getting both loans through Honda last weekend. We didn't have to "reassure" them in any way that we would make the payments. We sold Hubby's older SUV in one night on Craigslist!!