Can my daughter trade in her vehicle she hasn't paid on in two years?

by Charlene
(USA)

Question: I am trying to help my daughter get a car. 1st of all she is unemployed. Bad credit. And she has a car that she hasn't paid on in two years.

She called the finance company a year ago to tell them to pick up the car. The guy she spoke with told her they wouldn't because she only had $2000.00 left and it wasn't worth it. They told her just make payments to get title.

The car has so many mechanical issues. It's a 2000 with 140,000 miles. My question is can she trade that in if I co-sign for her. I have a stable job and pay all my bills on time. I have no driver's license though. We live in same city. Any suggestions you have would be great.


Answer: Hi Charlene,

I don't see their being a problem with trading the car in as the finance company will be happy to get it paid off. Realistically, a 2000 car with 140,000 miles and mechanical issues is probably only worth a couple of hundred dollars to a dealer as it will more than likely be wholesaled.

The difference between the payoff and the actual value will have to be made up for either with down payment or rolling it into the new car loan if the new lender allows it.

You can definitely cosign for her, but from the sound of things I wouldn't expect you to get prime rates with your daughter on the loan. The fact that you have no drivers license could be an issue, because your daughter has no income and you will probably need to be first on the loan. Some banks don't care if you have a drivers license, but many will.

This is a bit of a tricky situation and what actually may make it more difficult is the fact that you do not live together. Many banks will not accept a cosigner under these circumstances.

Cosigners are typically best when a first time buyer needs some help getting their first loan, but don't typically add much when trying to help someone with bad credit. Or in situations where income needs to be added to the deal.

Based on all that I'm reading it sounds like a Buy Here Pay Here dealer may be the best bet, but then you run into the issue with the trade in as they are more than likely not going to want it, but may roll the negative equity into the new loan with you on there as a cosigner.

What I've seen many buyers in these types of situations do is for the person with the stronger credit to simply purchase the vehicle in their name alone so that they can get approved with a better rate, which in turn lowers the payments and allows the purchase of a better car. Not recommending this to you, but just sharing what I've seen in the past.

I've also seen buyers just let the old car go back to the bank and then buy another one (it sounds like your daughter already tried this though). I am NOT recommending this, but just sharing what others have done.

Quite frankly, there is no way that your daughter will get a car loan on her own being that she is unemployed and has some credit issues.... Especially when one of those credit issues involves her current car loan.

Check with some local Buy Here Pay Here dealerships and see how they can help. Since they are both the bank and the dealer I would think they could offer you a solution. Just know that a Buy Here Pay Here dealer is going to charge high rates, like 20+%, and will charge you more than a traditional dealer for the new car.

The easiest way to find local dealers that specialize in bad credit auto loans is to apply with Auto Credit Express. They have arranged loans for over 1 million customers.

Hope this helps and sorry for the delayed response...

Justin