“These are definitely Covid deals,” exclaims Yusuf Benallal. He’s a used car dealer, entrepreneur, and vehicle loan consultant in Miami, Florida. Benallal’s talking about a message he got from a follower. The driver has a 2016 Honda Accord, which sounds practical enough. The problem isn’t the car, though. It’s the financing.

Driver still owes $20,000 on an Accord that’s maybe worth $13,000

The owner wants out, but they’re facing a $6-$7k gap in the payoff. To add to the hurt, they’re paying as much as someone else is paying on a nice F-150 or Wrangler: $800 a month.

The follower asks Benallal for advice on trading the Accord toward a lease or another loan on a different car.

“People don’t want to come out of pocket.”

The car dealer explains that when you have 6, 7, or 8 thousand bucks in negative equity, you need to come up with that cash…plus the down payment, taxes, fees, etc., on the next vehicle.

There is another option, though: leasing with incentives.

The kicker is that in order to secure a lease that gets you out of a messy car loan, you absolutely need a major qualifier: good credit that translates into a low “Money Factor.”

The lower the money factor, the lower the lease payment

Basically, when a dealership looks at your financial profile, the lower your credit and overall reputation, the higher the money factor, or risk to the entity agreeing to the lease. A higher factor means a higher lease payment.

In other words, without good credit, moving into a lease while attempting to offload an underwater loan probably won’t put you in a better spot.

“If you want a cheaper payment, you’re not going to get it by leasing,” Benallal explains.

What’s the ideal credit score to secure a low car loan payment?

The car dealer says that in order to get into a loan with a decent interest rate and “manageable” car payment, you’ll need a score of at least 680.

You can get a car loan with a 620, but “below 620 is when you start getting subprime banks.” Case in point: that used Honda Accord sucking up $800 a month with no end in sight.

A lot of drivers who sign loans in that subprime category realize the tremendous weight of the loan…when it’s too late

If you’re several months into a car loan and suddenly see the disaster you’ve signed into, your options are limited.

Same goes for this follower. “Unless you have money down, I would rock the Honda,” Benallal advises.

The driver might throw any extra cash they can at the loan until the payoff reaches the Accord’s market value. Then they can sell it and pay off the balance. Depending on their credit and cash in hand, though, they might need to move into an even cheaper daily (maybe even under better loan terms) and rebuild their score.

Otherwise, they can pay off the loan fully over time and then just keep driving the Accord. With proper maintenance, it’ll last.

This is certainly a reminder that just because someone’s behind the wheel of a practical car, it doesn’t mean their payments are.

It takes time to dig yourself out of a bad car loan, and sometimes even longer to land back where you started.