Hello. I will try to help you with this.
I want to make sure I understand the situation.
It sounds as if you took out a loan from a bank to purchase a car. You defaulted on a payment, and they have repossessed the car (or they have obtained the car in some fashion). After the car is sold, you believe that you will still owe on the loan.
Is that correct?
My son bought a 2008 Saturn Sky. He traded his 2007 Jeep Wrangler in for this car two months ago. He owes $34,000. for this car. He already gave them $1500. cash to pay off the jeep. Now, he has accepted a job in Denver and has to leave Florida. I was wondering if he could just let that car go back, he really can't afford to have that car. The payments are $681 a month for five years....He is without a job until January. We have never ever thought of ever doing anything like this, but I thought it was a good question. There is no way we can help him in this situation.........does he have to still pay the difference when whoever sells it. He paid 34.000 and in two months it only blue books for $24,000. The loan people sell the car for 24,000 and the loan is for 34,000, would my son still have to pay the difference?
That is a very good question. Like many people, your son is "upside down" on the car -- meaning that he owes more than the car is worth. People get stuck in this situation also when they are in a car crash and they can't use their car, but they still have to pay the loan, and the insurance payments are not enough to cover the loan (because the fair market value of the car is less than the loan amount). Sadly, your son is on the hook for the entire debt. He of course gets an offset for the amount they can get for the car, but he is liable for the balance.
Although it goes beyond your legal question, I would note of course that this is a problem with buying a new car, which loses value when it is driven "off the lot."
I am sorry that I do not have a more favorable answer -- and your question is a good one, but this is not an option that will really help him here.Please let me know if you have more questions about this. If this has answered your question, please click 'accept' so that I may receive credit for this response.
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