How to fix completely lousy car loans

ProDarwin wrote:

volvoclearinghouse wrote: The only way to reliably make "cheap" transportation work is if you have multiple cars, or flexible work arrangements.

*comment removed* I disagree. I don't want to derail, but I am always shocked when someone says that, especially on *this forum*. Edit: LOL at articles like the above where "cheap car" = 200k+ mile 13 year old Mercedes.

Agreed. I paid challenge money for a 90's corolla in the 00's, and I put gas, plugs, air filters, and brake pads into the thing for 5 years, while driving it harder than any corolla was ever meant to. It was as reliable as gravity, and a sedan to boot (great for loading kids into). I wouldve never let it go, except a family member had some life happen to them, and ended up with a few years newer Infiniti that I could have...HAVE. So, the 'rolla went on to the next owner, a cousin of the missus, who drove it for another 5 years.

TL,DR: A cheap, decent, AE101 (93-97) Corolla is probably better than or equal to a cheap, NEW, mediocre econobox of almost any vintage in terms of total cost of ownership.

EDIT: potentially not as reliable, but uber and the like can be a decent alternative when the car is in the shop

As a person with two cheap low-end Japanese cars, one of which is about as simple as a particularly fancy lawn tractor, I can tell you that you can still be left stranded. I've had them both break down on the same day before.

GameboyRMH wrote: See this article, and the one linked within by Jack Baruth: http://www.thetruthaboutcars.com/2015/07/no-fixed-abode-really-take-privilege-cheap-car/ Baruth makes some rather tortured arguments to exaggerate the cost of owning a cheap old car, but there are some good points in there, and I completely agree with the point about requiring multiple cars or flexible work arrangements. If you have one cheap old car you WILL be left stranded, likely soon. If you have two cheap old cars you can drive one while you fix the other. Even one new car is gambling, but in my experience it gives you odds that are about as good as two cheap used cars.

If your cheap old car is a worn out Mercedes? Maybe. I have daily driven then same cheap old car for almost 6 years now. It has never left me stranded, unable to get to work, or needed repair right now that couldn't wait a few weeks. I do my own work, but even if I paid a mechanic, I'd be far far ahead financially of the Mirage scenario. My car isn't the nicest, but it gets the job done. A $2K-$3K Camry will function like this for most people.

Sure, having an old cheap car CAN cost more than simply leasing a new car. And it is a higher risk. But I think its fair to say that the majority of cheap old cars that are simple reliable appliances will be significantly lower cost to own than anything new.

ProDarwin wrote: Sure, having an old cheap car *CAN* cost more than simply leasing a new car. And it is a higher risk. But I think its fair to say that the majority of cheap old cars that are simple reliable appliances will be significantly lower cost to own than anything new.

They are, overall, I'm not arguing that. But at times they can require surprise lump sums of money (sometimes one after another) and time to work on them. The new car, on the other hand, you can get for no-money-down and payments as reliable as the tides, with a warranty if anything goes wrong. When you literally can't save up enough for an emergency car part, that new car can start to look like a decent option.

EvanB wrote: In reply to GameboyRMH: Those two articles use a Mercedes and Lexus LS400 as examples...hardly a smart car to buy cheap as your only transportation. There are plenty of cheap cars that won't leave you stranded or need constant attention.

I've had lots of varieties of cheap cars, and I've always had issues with every one, issues which would be very difficult to overcome with me/it being the sole source of transportation to a job where that is mandatory and also conveying two babies.

In reply to tuna55:

Ok, finally wrote it. You've got mail.

GameboyRMH wrote: If you have one cheap old car you WILL be left stranded, likely soon. If you have two cheap old cars you can drive one while you fix the other. Even one new car is gambling, but in my experience it gives you odds that are about as good as two cheap used cars. BTW, I also recommend owning 2 computers and having at least 2 full bathrooms in your house for the same reasons...

I'm a firm believer in backups. I have a daily driver that's generally very reliable, and maintenance kept up. Put, stuff happens! For when that's down, I have a beater that I can use. When we moved in to our current house, I had a former closet turned into an extra 1/2 bath on the main level... Well, I had the hookups plumbed professionally, and did the rest myself.

That said, you have to be able to afford backups. In our case, the backup vehicles are sometimes loaned out to friends of the family who need them because they can't afford or can't park another vehicle. But at that point, they are at the mercy of "is it available?" because at any given time, it may be inop, in use by me, or by someone else.

GameboyRMH wrote: You presume a lot about her money management skills. Most people aren't keeping themselves poor simply by spending like MC Hammer. If she's already started managing money properly, Dave Ramsey's book will be of little help, even if you throw in a pair of bootstraps.

I disagree, GB. First off, we don't know all the details (THANKFULLY) of this, but in most cases that I've seen, people with horrible credit who find themselves stuck with 22% interest rates on 4K cars they owe 10K on generally have very poor money management skills. See "horrible credit" and "22%". Do they have credit reports on your little island? Up here with the big dogs on the mainland, they track everything, and if you have "horrible credit" it is usually because you don't pay your bills. Now, E36 M3 happens and all, and we won't get into the racket that is "medical debt," but managing money properly is the first step, and Dave's philosophy as taught in his books, is a good foundation for people that have no other role models or guidance on how to do it.

As for beaters, yeah, well, people need help on picking a good one. And the step in Dave's books about building up one large as an emergency fund will cover the minor incidents in keeping the beater on the road. Get an older Corolla, Cellica, RN Truck, etc., and costs to keep it going are minimal. Certainly under four bills a month.

I am not suggesting that her getting a beater is the best solution here either. 6K upside down, she's kinda berked there. If the car is otherwise reliable, even if she sold it for 4 or 5 she would still have 5 or 6 on some type of other loan, probably unsecured, not necessarily at better terms. And the reliable car (if it is) is an asset. If she was 1K upside down, then, yeah, save up 2K, dump that thing and get a 1K Rolla. But 6K upside down, that pretty deep.

Shop the insurance too, as mentioned. I mean, I insure 5 vehicles, 4 with "full coverage" with the lizard for about half of what her insurance is on one car.

The roommate thing was a good idea, if she can find someone she knows that is compatible with her situation, not one off of CL. Again, we (THANKFULLY) don't have all the details here.

GameboyRMH wrote:

ProDarwin wrote: Sure, having an old cheap car *CAN* cost more than simply leasing a new car. And it is a higher risk. But I think its fair to say that the majority of cheap old cars that are simple reliable appliances will be significantly lower cost to own than anything new.

They are, overall, I'm not arguing that. But at times they can require surprise lump sums of money (sometimes one after another) and time to work on them. The new car, on the other hand, you can get for no-money-down and payments as reliable as the tides, with a warranty if anything goes wrong. When you literally can't save up enough for an emergency car part, that new car can start to look like a decent option.

There is the completely nontrivial aspect of being broken down on the side of the road waiting for a tow truck with babies also.

One thing like that could lose a poor person their basic job and devastate them.

I'm not advocating for new cars for all poor people here, I'm just saying that in a single income, single parent, multiple dependents and zero buffer scenario, a dirt cheap car is not always wise.

Dr. Hess wrote: In reply to KyAllroad: A powerball win would not fix it either. There are plenty of examples out there. Maybe buying her a copy of Dave Ramsey's book would help? And I see nothing patio worthy in this thread.

Her money management skills are good now, but she has never shopped for these things to know if/how much negotiation room there is. I'm helping now that I have gotten some good advice here.

There is a lot of patio worthy stuff, but obviously I'm keeping it out. PM me if you are curious.

SVreX wrote: In reply to tuna55: Ok, finally wrote it. You've got mail.

Love it. You're a good man. I have no clue how to make this happen though.

Dr. Hess wrote:

GameboyRMH wrote: You presume a lot about her money management skills. Most people aren't keeping themselves poor simply by spending like MC Hammer. If she's already started managing money properly, Dave Ramsey's book will be of little help, even if you throw in a pair of bootstraps.

I disagree, GB. First off, we don't know all the details (THANKFULLY) of this, but in most cases that I've seen, people with horrible credit who find themselves stuck with 22% interest rates on 4K cars they owe 10K on generally have very poor money management skills. See "horrible credit" and "22%". Do they have credit reports on your little island? Up here with the big dogs on the mainland, they track everything, and if you have "horrible credit" it is usually because you don't pay your bills. Now, E36 M3 happens and all, and we won't get into the racket that is "medical debt," but managing money properly is the first step, and Dave's philosophy as taught in his books, is a good foundation for people that have no other role models or guidance on how to do it.

Well yes, she's certainly made some horrific money management decisions in the past that she's now suffering the consequences of. But from Tuna55 saying she's "basically just turned on her brain for the first time a few years ago" it seems that she's stopped that and is now managing money decently, even if that doesn't get the consequences of past mistakes off her back. Getting into a nasty upside-down car loan doesn't mean you have terminal MCHammeritis.

GameboyRMH wrote:

Dr. Hess wrote:

GameboyRMH wrote: You presume a lot about her money management skills. Most people aren't keeping themselves poor simply by spending like MC Hammer. If she's already started managing money properly, Dave Ramsey's book will be of little help, even if you throw in a pair of bootstraps.

I disagree, GB. First off, we don't know all the details (THANKFULLY) of this, but in most cases that I've seen, people with horrible credit who find themselves stuck with 22% interest rates on 4K cars they owe 10K on generally have very poor money management skills. See "horrible credit" and "22%". Do they have credit reports on your little island? Up here with the big dogs on the mainland, they track everything, and if you have "horrible credit" it is usually because you don't pay your bills. Now, E36 M3 happens and all, and we won't get into the racket that is "medical debt," but managing money properly is the first step, and Dave's philosophy as taught in his books, is a good foundation for people that have no other role models or guidance on how to do it.

Well yes, she's certainly made some horrific money management decisions in the past that she's now suffering the consequences of. But from Tuna55 saying she's "basically just turned on her brain for the first time a few years ago" it seems that she's stopped that and is now managing money decently, even if that doesn't get the consequences of past mistakes off her back. Getting into a nasty upside-down car loan doesn't mean you have terminal MCHammeritis.

Dude, for all we disagree on political things, we are lock-step here.

I tried to hook her up with Jeep lady. No dice, yet.

[indirectly affiliated]

I realize that your friend looks bad on paper, but perhaps it's still worth it to try one of the web-based lenders that can give rapid approval/decline and quick access to funds if approved.

http://www.lightstream.com/vehicle-refinancing
http://www.lightstream.com/debt-refinancing

[/indirectly affiliated]

KyAllroad wrote: A word of caution here however: I have a cousin who is similar, everything is always falling apart in his life. He always needs something. It's never (directly) his fault but each poor decision leads to more E36 M3 piling up on him. Eventually I had to step away because he was an infinite pit of need and nothing short of a powerball win was ever going to improve his life. tldr: don't get sucked in.

I am deathly afraid this is my son.

tuna55 wrote:

SVreX wrote: In reply to tuna55: Ok, finally wrote it. You've got mail.

Love it. You're a good man. I have no clue how to make this happen though.

What are we talking about, some sort of GO FUND ME or something?

volvoclearinghouse wrote:

tuna55 wrote:

SVreX wrote: In reply to tuna55: Ok, finally wrote it. You've got mail.

Love it. You're a good man. I have no clue how to make this happen though.

What are we talking about, some sort of GO FUND ME or something?

Bigger. We'll contact you in a few days. It's a neat idea.

I think the car payment issue has already been covered sufficiently, work with lenders to modify/refi/etc or just keep paying, but has she looked into this at all for the child care issue?

http://www.scchildcare.org/departments/sc-voucher.aspx

Driven5 wrote: I think the car payment issue has already been covered sufficiently, work with lenders to modify/refi/etc or just keep paying, but has she looked into this at all for the child care issue? http://www.scchildcare.org/departments/sc-voucher.aspx

I have ever heard of that! I'll tell her immediately.

The good news here is that in the 48k miles I drove my '14 Mirage it needed nothing from a maintenance standpoint except oil changes, and the warranty is pretty decent as long as there are still Mitsubishi dealerships around. So, while it's not a wonderful place to spend time there is every reason to believe that barring accident she should be driving something both reliable and cheap on gas.

Shop around the insurance, though, and raise the deductibles to get that under control. Mine was under $35/mo for full coverage.

As far as shopping insurance, if she is in her early 20's and carrying full coverage, it doesn't surprise me her insurance is high. And we don't even know if she has a clean record. I pay a lot less for insurance on 3 cars now than I did 25 years ago on one car.

Ian F wrote: As far as shopping insurance, if she is in her early 20's and carrying full coverage, it doesn't surprise me her insurance is high. And we don't even know if she has a clean record. I pay a lot less for insurance on 3 cars now than I did 25 years ago on one car.

I have a feeling her awesome lender has awesome insurance requirements.

In reply to Ian F:

Yeah, my insurance was crippling when I went out on my own and got off my parents. I was 22 and had a Scion TC, cheapest I could find was $330 a month. Granted that had a lot to do with the car and my age.

When it comes to shopping insurance, I personally would not recommend somebody to have a deductible greater than they can pull together within a month while still meeting all of their other minimum financial obligations...And ideally not greater than they have available at a moments notice at all times. If everybody could simply rely on being careful, nobody would need insurance in the first place.