ShanInTx

DH wants $20,000 auto loan with 535 FICO

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Sorry so long, but wanted to give as much information as possible.

My husband needs a new car for work...He's a salesman and drives about 600 miles a week. His last car, paid off, had 250,000 miles and the mechanic said, time for a new one.

We went to dealership #1 who could do the deal, but didn't have the exact car he wanted (they had one with more bells and whistles and thus more money...Sold his paid off car for the cash downpayment. Then dealership #1 came back and said, no, sorry, can't. We can get you into something else though. (He didn't want the something else. but he was considering it because he needs a car)

Went to dealership #2 who said, yes, we can do the deal on the car he really wanted. We signed the paperwork with dealership #2, took the car home (told dealership #1 never mind and give us our down payment back--gave downpayment to dealership #2). Now, it's about 10 days later and dealership #2 is saying, oh sorry. You didn't tell us you pay child support so we can't do the deal.

Now we are in a bind because he has no car for work.

Both dealerships were charging 18% interest because of a 535 credit score. (Oh, and co-signer isn't an option.)

My thought is to take the $1500 down payment and buy a cash car to use for a short time (maybe 1 year) while we work on repairing the credit. I even offered to let him use my car which has about 100,000 miles and I would take the cash car.

But, he wants new since he drives so many miles.

Any other options that anyone can think of that might help?!?

Thank you in advance for any help/advice.

Shannon

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Hey,

This is my personal advice to you :)

1. Don't get the car loan.

2. Buy a car for $1500.

3.Build up a $2000 emergency fund.

4. START to repair your credit.

5. Don't get into 20k more into debt

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Shannon, take the advice of the poster above me.

Don't get the new $20,000 vehicle at all.

The excuse that your husband is using ('he has to have a new car because he drives so many miles') is just that - an excuse. The minute he drives it off the dealership lot the car devalues - new vehicles lose value more quickly than used vehicles. If he is afraid that having an older vehicle will mess with his sales - that thought is in his head, not in the vehicle he drives.

Get the cash vehicle. Save for the emergency fund first. Save up enough cash for the next one if he still wants a new car - make him pay cash for it out of his savings. Once he saves up $20k he will feel differently about spending $20k on a car! :mrgreen:

Have your husband research Dave Ramsey and read and listen to him about credit, loans, and savings. Good luck to you.

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Something to know about autotrader.com ... there are people who put a car up there and just drop the price by $100/week. If the phone doesn't ring, the car can be way below book .... look for these situations near you and jump on one.

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With a 535 FICO hubby is not in the driver's seat as far as negotiating power is concerned. Expect to put about 50% down.

If hubby puts that many miles on a car and needs it for work I tend to prefer going new because a new car comes with warranties, used cars usually don't, and those that do come with warranties either have such a short term warranty it would be useless (500 miles) or you will have major problems getting the warranty work done. If you go over to Ripoffreports, almost all complaints there about car warranties are about used cars. Maybe hubby can settle for a cheaper car until his credit improves.

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unless he's a general contractor, he can get a NEW car (if that's what he so truly wants) for less than 12 grand. Sure, it's not a nice Audi or VW or whatever, but hell it's not 20K either!

What sort of car does he "need"?

*Excellent advise by all posters above me, for the record*

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What I find interesting is the repeat of the phrase, "car he wants"....! :shock: When you have a 535 FICO, you take what you can get/afford.

I agree that you should pay cash and fix what is wrong with credit behavior BEFORE you enter into a new credit contract.

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I drive 50,000 miles a year. Buying a new car is a HUGE mistake. You're talking about going $20,000 in debt on a car that he's going to literally destroy in just a couple of years. 3 years from now y'all will be saying, "we need a car but we can't get a loan because we owe $16,500 on a car worth $10,000 (if you're lucky) and we can't sell it because no one wants a high mileage XYZ and we don't have the cash to pay the difference and get the title". Your only option would be to trade the vehicle in for less than you could get private sale and roll the remainder of the loan into a new auto loan at an even higher interest rate and be immediately upside down in another new car that will depreciate like a rock. It's a viscous cycle. Debt hasn't been kind for you and NOW is the time to break the cycle. If you guys have $1500 for a car, buy a $1500 car. I have money set aside to replace my beater when it finally dies. For reference, I work out of a vehicle with almost 300,000 miles that is perfectly find mechanically. Instead of having car payment to the bank every month, I pay myself one for vehicle replacement.

Trust me as someone that has driven nearly 1000 miles a week for several, several years. Limit your vehicle purchases to $7000 or so and PAY CASH. Pay yourself a payment every month into a separate account and drive it until the wheels fall off. Consider this too, any repair on his current vehicle is going to cost less than $20,000. I have done repairs on my beater that were technically too expensive for the value of the vehicle. However, there were only 1 or 2 problems, not a string of them and the repair still cost less than a vehicle replacement.

The time to ditch a car because of costly repairs or because you're just tired of it is when you have the cash to replace it.

Edited by KWKSLVR
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I wish I would have found this website 12 years ago and not 6 years ago. If I had taken the advice of people that made the same mistakes before I did and then shared, my story would not start with a Chapter 7 filing. :)

In any case: go for the older & reliable vehicle. When it comes to the image of the vehicle, I would respect someone driving a modest older vehicle much more than a brand new car. I would take it as a sign that the company isn't gouging me, and that the sales person is cost conscious. Just build a relationship with a good mechanic and have it looked at from time to time to do some preventive maintenance.

One more note- I've handled a few bankruptcies in the past few months. Every single filer that came into my office is WAY upside down on a car at high interest. They tend to have some confounding issues, but the one consistent pattern is the presence of the high-interest late model upside down vehicle.

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