At this point, your only choice is probably going to be a buy here pay here car lot. You probably don’t qualify for a loan through a subprime lender due to a number of issues:
1. The ACV of your trade-in is low
2. Your monthly budget for a vehicle really limits what you’ll qualify for, since most subprime lenders normally budget $100 per month just for full coverage car insurance
3. Your credit score is very low

Even if you had outstanding credit, the only way you could get out from underneath thousands of dollars in negative equity would be to buy a second vehicle and let the other one get repossessed – and even in that case, the lender could still come after you for the deficiency balance.

If your credit is bad, there is very little that you can do other than repair the mechanical problems and continue paying on the loan until you have erased the negative equity – at which point you can trade it in on a different vehicle.

We don’t do cash sales, but you might want to check one of the local car auctions to stretch your dollars. Here is a link to the Volunteers of America web site:

http://www.voaautoauction.org/

You are correct in assuming that there will be a problem with bad credit lenders due to your income level. For the most part, bad credit lenders require a monthly income in the $1,800 range – with a few stretching to $1,500 if you have a stronger than normal credit history.

At this point in time, you might want to consider a “buy here pay here” or “tote the note” car lot that does its own in-house financing.