With the economy just starting to recover, a car payment that’s as high as someone’s monthly mortgage payment can only make things worse.
That’s the exact situation one man was in. According to TikTok user Ride with Yusuf (@ridewithyusuf), a car specialist who also teaches people how to buy and sell cars in their spare time.
Yusuf garnered over 175,000 views when he spent time going over the options of a man shackled by over $1,500 a month in payments for his 2021 Dodge Ram. And he’s not the only one in trouble with a car note these days.
$1,500 monthly payments on Dodge Ram
Yusuf called the man looking to get rid of his 2021 Dodge Ram 1500 that he got with no money down. Currently, the owner pays over $1,500 a month; $1,351 a month for the truck and around $300 in insurance. Despite the potential client having a good credit score of 730 and an estimated monthly income of $7,000 to $10,000, he still owed close to $70,000.
“I knew it was gonna have a lot of negative equity, I should’ve just been a little bit smarter with it,” the owner said during the conversation.
The good news is that the truck was in good condition, with 62,000 miles, a clean CarFax, one owner, and no accidents.
Yusuf explained that he wouldn’t offer more than $38,000. The owner could either lease his own Dodge Ram from Yusuf, and put down an additional $10-15,000 to lower the outstanding balance, or he could sell his truck. He would be either $20,000 or $30,000 in the hole.
“Those are the only two options right now, or you can keep riding it out till either the truck dies or you pay it off,” Yusuf said.
What’s negative equity?
According to Nerdwallet, negative equity is when “you owe more than the car is worth.” The finance advice website lists making extra payments, refinancing for a shorter loan term, making payments until you owe less than the car is worth, or burying the negative equity in a lease.
FairLease, a car leasing site, explains that negative equity can occur due to vehicle depreciation, long-term financing, high interest rates, lack of a down payment, and rolling over previous loans. High mileage can also lower a car’s equity.
Yusuf decided to throw a bone to the owner by explaining some other ways to improve the situation. These options include refinancing his loan at a better interest or leasing an electric vehicle that comes with incentives to offset some of his negative equity.
Commenters stunned by the car debt
“He pays more than I do for my mortgage. Wow,” a viewer said.
“How? I mean honestly how the hell do these people get themselves into these situation??” a second wondered.
“He must of put 0 down for that price a month,” another observed.
“Option 1 -$20,000 down. Option 2 -$30,000 down. Take your pick,” a fourth summarized.
He’s not alone
Unfortunately, car payments have become a burden for many Americans. For example, one TikToker documented how her dealership disabled her vehicle after missing a payment, stranding her in the Planet Fitness parking lot. As of 2015, an estimated 2 million vehicles had these devices installed.
@ridewithyusuf Customer is paying $1600 a month for a Dodge ram 1500 that he owes almost $70,000 on and wants out of it. #cardealer #cars #fyp #dodge #dodgeram #trucks #tradein #carsales #dealership #dealershiptiktok ♬ original sound – Ride With Yusuf
The Daily Dot reached out to Yusuf via TikTok Comments. No other form of contact was available.
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