DOA car - what now?
July 19, 2007 7:40 AM   Subscribe

What's the best way to deal with a DOA car when the owner still owes $2000 on it and has terrible credit?

My friend is a single mom with two grade school age kids. Her Chevy Impala, which she bought new, just blew its head gasket and it's looking like it'll need a rebuild amounting to $2000+. She still owes $2000 on the car and her credit is terrible. I have not ever been in a situation like this before. Can such cars be traded in? What do people do with them if they don't want to repair it? Any ideas, Hive-Mind?
posted by charris5005 to Travel & Transportation (7 answers total)

This post was deleted for the following reason: can we combine two threads about the same car?

Many U-Pay lots will take a completely dead car as a trade-in; they specialize in putting bad credit risks into cars. However, they can do that because they extend the credit, and the interest rates are astronomical.

Try talking to local, independently-owned garages for barter. If she has a skill, some small-business owners will still trade goods for services. Typing, filing, web design, who knows- just ask.

Finally, if she just has to get rid of the car, you can donate a non-functioning car to The Kidney Foundation, and at the very least, get a tax deduction.
posted by headspace at 7:57 AM on July 19, 2007

This has happened to me a few times. As a single parent with a grade school child.

Depending on where you live, many places will salvage the car for some small price. You give them the car and the title, and they pay you 25 bucks. Some places charge, others do it for free. Look under "auto salvage" in the yellow pages.

Alternatively, she could talk to the local tech school or high school and see if the can do the work if she provides parts. This will still run several hundred dollars or more, as the head and associated parts can be pricey. This entire process may expose or introduce new points of failure that will have to be addressed.

In my experience, it is better to junk the car and find another way to get around when this happens. When my Mazda pickup blew it's head gasket a few years back my gradeschool aged son and I rode our bikes everywhere. In the winter, in WI. Point is, it is possible, although arbitrarily difficult, to get by without a car.

If you/she feels that she needs a car, it is always possible, though maybe not easy, to find one for few hundred bucks. This will be cheaper and easier than fixing a blown head.

Hope this helps.
posted by Pogo_Fuzzybutt at 8:05 AM on July 19, 2007

People trade in cars on which they still owe money all the time. If the value of the car exceeds the amount owed, then the balance would be considered a down payment. If, however, the value of the car is less than the amount owed, commonly referred to as being "upside down," the difference is rolled into the new loan on the new car.

In your friend's case, the amount owed is probably more than the car is worth, since it's a.) a Chevy Impala, and b.) inoperable.

These days, terrible credit will not necessarily prevent her from getting another loan for another car, but it will mean her interest rate will be very high, and that will likely lead to her being upside down on the next car.

It is possible that some car dealer will take the non-running Impala in trade, perhaps give her $500 for it and roll the remaining $1,500 into her next loan. But needless to say, a car that doesn't run is not very desirable.

Alternatively, she could find a grey-market mechanic who will do the head gaskets. Because it's a V6, that would be two head gaskets, and more expensive. Also, if water has been mingling with the oil, the engine is likely ruined.

Another option would be to find a junkyard engine and have the aforementioned backyard mechanic put it in. Such an engine would probably cost between $500 and $1,000, and a friend or relative with a good shop manual and some mechanical inclination could probably get it in.

Finally, she could sell it as needing repair, maybe get $400 or $500 for it, ride the bus until the loan is paid off, then get another, more reasonable lightly used car. The problem with this is that her bank has the title, and won't give it to the new owner until the loan is paid.

I'd probably go for the junkyard engine.
posted by M.C. Lo-Carb! at 8:09 AM on July 19, 2007

She needs to evaluate what the car is actually worth and how long it is likely to last with the engine repaired. All this advice to junk the car is bad if, for example, the car is a 2002 Impala with 50,000 miles on it and she only owes $2000 on it.
posted by jcwagner at 8:14 AM on July 19, 2007

Never ever go to those "we finance everyone" lots. They'll try to talk you into taking a 1987 Ford Tempo for 5 years of payments totalling $10,000. The cars are "worth" whatever down payment they ask for; every payment made after the down payment is strictly profit for those places. I don't know how the owners and salesmen for those places can sleep at night.

As jcwagner indicated, the year and condition of your friend's car will make a big impact on the decision. Has she checked to see if it is still under warranty? There could also be a recall or other defect-reparation that offers specific remedy for this.
posted by yesster at 8:30 AM on July 19, 2007

A new head from a junkyard's gonna be ~$100. The challenging part is finding someone to change it for less than $500.

However, if she bought this car NEW and still owes anything on it, it can't be more than 6 years old, which means it's at least a 2001, so it's definately worth the $600 it'll take to fix it, versus swallowing $2k of loan + the new payment.

Now the question is, why did the head blow on a young car? Did it overheat? Why did it overheat? Etc. etc. etc.
posted by TomMelee at 8:50 AM on July 19, 2007

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