‘File Bankruptcy’: Man Tries To Trade-In Hummer EV. Then the Dealer Discovers He Still Owes $170,000
‘Traded in a brand-new BMW X6 and Silverado.’
A car dealer who specializes in automotive financing shared how one Hummer EV owner found himself in a $90,000 hole. Yusuf Benallal (@ridewithyusuf) regularly posts videos of his phone conversations with customers he helps buy or sell vehicles. Furthermore, he offers consulting calls to assist buyers who have found themselves in bad car deals. Yusuf uploaded his call with the Hummer owner on both Instagram and TikTok as an extreme example of the types of equity woes drivers can find themselves in if they don’t budget their purchases appropriately.
Benallal breaks down just how bad of a financial situation the customer has found himself in with his car. A text overlay reads: “Customer trying to trade in Hummer EV owes $170,000 pays $3,300 a month!”
Hummer EV: Financial Pit Of Despair
The dealer’s video begins with him introducing himself to the Hummer owner, Anthony. “You are upside down big time,” he tells the man out the gate. Anthony quips back, “just a little bit,” making light of the $100,000 he’s found himself having to cover for the high-end performance electric truck. Benallal instantly asks the man what he’d like to do with the truck. Since the MMR value of the vehicle sits at between $78,000 - $79,000 and he owes $168,000 on it, the customer is in a real bind.
Anthony then delineates how he found himself in such a situation. He was one of the Hummer EV’s early adopters, purchasing the truck at a staggering $200,000 price.
Hummer EV Markups
Anthony attributes the massive debt disparity he now possesses to the craze surrounding the Hummer EV’s initial release. A myriad of the trucks were sold around the $200,000 mark. Popular auto enthusiast Doug DeMuro clocked one sale of the EV at an eye-watering $260,420 as well, which seems to be the highest price tag a person paid for one of the vehicles.
Anthony appears to be one of the unlucky buyers who bought into the hype, right before the EV’s “markup hell” ended and valuations severely precipitated.
Anthony went on to say that fervor around gas prices during the Biden administration didn’t help matters either. Further compounding his financial woes were Anthony’s possession of two other vehicles: A BMW X6 and a Silverado that were also fairly new. He says that he ended up eating the depreciation of those cars when he traded them in.
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This negative equity was rolled into his purchase of the Hummer EV, which is why he was left with such a massive car note. Anthony says that he should’ve just walked out of the dealership, especially considering that his bill came at a 10% interest rate.
At this point in the clip, Benallal does offer a silver lining, however. He tells Anthony that compared to the other calls he’s received, that 10% rate is comparatively akin to a 1% vig. This elicits laughter from Anthony, before the two men get into how much Anthony pays monthly for the car.
Benallal Wants the Hummer EV
With only 11,000 miles on the odometer and the fact that the car appears to be in good condition, Benallal tells Anthony he’d like to buy the car. He offers him $79,000 for the car, but that still leaves Anthony with $90,000 in negative equity. Next, Anthony informs Benallal that he’ll be able to give the car dealer $20,000 down to bite into the amount he owes on the ride.
This leaves him with around $70,000 in money he’ll have to pay back on the Hummer EV purchase. Which also carries the negative equity on the Silverado and X6 he had lumped into the sale.
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Benallal did offer some other financial maneuvers he could help pull off for Anthony to slash his debt. The seller tells the Hummer owner that he could put him into another EV that comes with tax incentives that could bring down the car’s price. However, even with that, Anthony would find himself having to foot the bill for around $45,000 in the negative equity. He tells Anthony that he’d need to put $40,000 to $50,000 down in order to release the Hummer EV albatross hanging around his neck. And unless Anthony was able to come up with that much money down, Benallal informed him that he didn’t think he would be able to help him out of his situation. Anthony’s response was polite and understanding, and he expressed how shocked he was to Benallal that a bank would allow a buyer to purchase a vehicle with “that much negative equity,” he said.
Benallal ends the call telling Anthony that if he’s able to come up with the $40k-$50k down he still indeed wants the car, bringing his video to a close.
Making Smart Car-Buying Choices
In a caption for the post, Benallal broke down the situation further, stating that Anthony’s “case serves as a reminder” of the massive monetary burdens drivers can find themselves in. It’s an incident he says “particularly [occurs] with high-end vehicles like the Hummer EV.”
Moreover, numerous financial analysts warn consumers about the dangers of purchasing new vehicles. That’s because the highest years of depreciation for vehicles occur within the first three years that they’re manufactured/purchased. Self-made millionaire David Bach said in an interview with CNBC that “nothing…will waste more money than buying a new car. It’s the single worst financial decision millennials will ever make.”
Additionally, the outlet writes that many vehicles lose up to “60 percent or more of [their] initial value” within the first five years. And in the first year, cars can lose up to “20 to 30 percent” of their value, CNBC reports.
In Anthony’s case, he owned two newer vehicles, a BMW X6 and Chevrolet Silverado, which aren’t renowned for their gas mileage. He sold the cars at a time when EVs and hybrids were in high-demand due to gas price surges. Presumably, this, coupled with the standard depreciation amounts for newer vehicles, contributed to the bevy of negative equity he amassed.
These factors, paired with the rabid demand for electric vehicles, along with the vaunted air of desirability surrounding the Hummer EV at the time, created a perfect debt-storm for Anthony.
Commenters React
Folks who replied to Benallal’s video were shocked by Anthony’s decisions. One person couldn’t believe that Anthony spent that much money on a car to combat rising gas prices. “Gas prices were really high, so I decided to spend $150k,” they penned.
Another couldn’t believe that the Hummer EV owner couldn’t be a bit more forward-thinking. “Dude lost me when he said he traded in a brand new BMW X6 and Silverado truck for this hunk of depreciation,” they wrote.
Someone else was shocked at the amount of negative equity he had amassed. “The thought of $90k just going out the window is insane,” they said.
One person couldn’t understand why someone who loves cars, as Anthony said he does, wouldn’t just buy a cheaper vehicle. “Man if you love cars get a Miata or something,” they remarked.
There were other people who shared alternative ways Anthony could get out of debt, however. “Gap insurance and a big cliff,” one said.
Whereas another thought Anthony could go another route that doesn’t involve insurance fraud. “At this point take that 20 grand out the bank buy a cash car about 8 grand. Give the Hummer back max out credit cards and file bankruptcy,” they remarked.
InsideEVs has reached out to Benallal via email for further comment.
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