My First Car Cost Me $40,000 – Upside Down Car Loan

I finally obtained my driver’s license in summer 2018 (22 years old) and I had $1,000 saved up to put a down payment on my first car. So I browsed around on to figure out what car I wanted. The Mazda A3 and A6 (2010-2012) appealed to me and was in my price range.  
I contacted every dealer in my area that had a 2010-2012 model.  All the dealerships ended up rejecting me for financing.  Due to my credit score/history being to low for a $1,000 downpayment.  I would have to put down around $2,500, which I was not comfortable with at the time. 

Off To the Bad Credit Dealership! 

I wanted to get a car so bad I ended going to one of those bad credit car dealers. The salesman told me over the phone that he could get me into the car I wanted for $1,000 down payment. There was another dealership that had it at $1,500 that was planning to go to before they called me. And the financing was all set up on their end. But the bad credit salesman showed allot passion over the phone, he had me convinced that  I was going to get the car I wanted at my desired price.
I went to the bad credit dealership and test drove a Mazda A3. It was in good condition and the drove smoothly. Got back to the dealership and had me wait for about an hour to go through the financing.  Turns out they were unable to get me the financing I needed for $1,000 down payment. I had to put down a higher down payment.  At the time the 2012 Mazda A3 was worth around $12,000.
But they were able to get me financing for a (sticker price) $20,000 2015 Toyota Camry Le (I dislike their logo it’s very generic). 
At that point I should have just left, I didn’t do any research on the car. But I had prior obligations that I needed a car for, so I took the deal. Also, I had to be at work in 50 mins. So I took the deal, feeling uneasy about the numbers but joyful that I had my first car.
After taking the deal I learned that I agreed to pay $4,000-$5,000 over the average KBB price.
Below I’ll run you through all the numbers.


I paid $1,500 for the down payment ($1,000 upfront and $500 2 weeks later). I was put on a 6-year car payment plan (22.95% intrest rate). With a $490.98 monthly payment. If I don’t pay it off early or refinance I’ll end up paying $35,350.56.
$4500 Down Payment (“Dealership Covered $3,000”, price was inflated)
72 Monthly Payments of $490.98 (Total: $35,350.56)
Maintenance Repair Cost
August 2018 – $56.40 (40,000 Mile Standard Maintenance)
September 2018 – $291.82 (Battery Replacement, Cabin Filter Replacement & HVAC System Cleaning)
November 2018 – $26.63 (Flat Tire Patch)
December 2018 – $35.00 (45,000 Mile Standard Maintenace)
Car Sold Price: $20,000 (June 2018)
Average  KBB Trade-In Value: $11,220 (10/05/2018)
Average  KBB Private Sale Value: $13,490 (10/05/2018)



  • Got my first car so I’m mobile.
  • Able to due ride-share side hustles to increase my income. 
  • Have a big debt on my credit report, which will help me in the future.


  • I have Upside-down car loan.
  • Agreed to an overpriced deal. 
  • Unable to refinance until I pay off a significant amount of the loan.
  • Could have gotten a cheaper car if I had waited. 

My Pay Off Plan

I have applied for a couple of refinancing agreements, but I was rejected. The pay off amount is significantly higher than the car’s value. I’ll have to keep making payments with the same APR until the pay off amount is closer to the car’s average value. After that, I should be able to get the loan down to at least 10% APR on a 72-month payment plan. Once I get the loan under the car’s value I’ll probably sell it and get a Mazda.
Ultimately this was a financially stupid decision and I would have been better off waiting. But I’m happy to say that taking this bad deal has further motivated me to raise my income game.
Have you taken upside down car loan before? How did you get from under it?

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