After last week’s dealership story involving a customer nearly $30,000 upside-down on a Genesis they wanted to trade in on a Mercedes GLS, I thought I wouldn’t see anything that could top it for a while. I was wrong. A 21-year-old first-time car buyer got into one of the worst used car deals I’ve seen, on a used Chevy Camaro of all things.
This latest auto loan fiasco comes to us via YouTube by Yusuf Benallal, a car dealer who seems to regularly encounter folks that have more money than sense. We recently saw a customer of his who had a horrible deal on a GMC Hummer EV, and he has other videos like someone paying $1,2000 a month for a Dodge Charger Scat Pack or another who owes $30,000 on a Nissan Kicks loan.
Aside from selling cars at Legacy Motorcars in Marietta, Georgia, Yusuf also gives financial advice to those wanting help with their auto loan situation. In his latest video, he takes a call from a 21-year-old woman located in Virginia who is interested in getting into a Kia K5. The woman says she was watching the videos on his channel and trying to figure out what she can do about the negative equity on her car. She goes on to explain that she recently purchased a 2015 Chevy Camaro with 140,000 miles seven months ago.
The woman admits she knew nothing about buying a car as she was a first time buyer. She says that because she was basically financially illiterate, the dealer took her for a ride and gave her a high APR, which she called “bullshit,” but this was something she didn’t think about at the time because she really needed a car. Yusuf asks what the APR is and it hits like a ton of bricks: she says “about 23 or 25 percent,” which is credit card–like.
Things get worse when Yusuf asks her how much she’s paying on the car. She says when she purchased the car it was $15,000, but they threw in gap insurance, which brought the amount up to $20,000. She says’ there’s still $18,000 left on the loan and the monthly payments are $1,300. It’s all made even worse by her mentioning she only makes $3,000 a month, meaning nearly half of her income is going to towards this car. Luckily she pays just $625 for her portion of her rent, but still, she’s left with nearly no margin for error.
Yusuf is doing what he can to help her, asking if she watched any of his videos. She says that if she had watched them before she got the Camaro, she would have never purchased it. The problem comes when Yusuf goes to look at what the Camaro is worth. The five-owner car has no accidents, but at 10 years old and with the miles it has, it’s only worth $5,000 to $6,000, meaning she’s $12,000 to $13,000 upside down on it. She also only has $1,000 to put down on the Kia K5 she wants. With all that going against her, Yusuf tells her she won’t be able to get into that Kia, as with all the negative equity she’s compounding it would put her balance at nearly $50,000 and make her payment even higher than it is now. His advice to her is to not buy a new car. He says she probably won’t listen to him, but her credit is not quite there yet for a new vehicle.
That’s the sad part. She likely won’t listen, and will come across a dealer who will hand her a shovel to dig an even deeper financial hole for herself. With more and more of these situations popping up thanks to social media, it’s still amazing to see so many people that willfully get themselves into life-ruining financial situations just for chance to drive a piece of metal.
