How to fix completely lousy car loans

KyAllroad wrote: It still strikes me as a jacked up situation where the very least able to afford a new car are the ones who end up buying them because of low buy-in costs and extended payment plans. Where for the vast majority a 4-6K used car would be perfectly fine and serve their needs but saving 5 large is beyond many (most?). Tuna, I feel for your friend, I really do. It sounds like she's on her way but it's gonna be a looong road.

If you had asked me ten years ago, I would have had a completely different outlook, but now I see a lot more about how people totally take advantage of the poor, and how the system seems rigged against them ever not being poor, and it stinks.

But let's not build patios, because the rest of her life is way more complicated.

I can't believe a 2 year old car is worth 1/3 of what it cost new.

But agree with tuna- having the transportation is the most important thing right now. Trying to sell a (so far) reliable car and get something else..unknown...could send her right back down the debt spiral.

Cheap cars are a rich person's game.

I wouldn't recommend letting the car get repo'd. Not only are there hosts of other ramifications, it just sets a bad precedent. She's trying to better her situation- and a repo is something that poor people who can't afford their cars do. She signed the loan, she's responsible for it. It sounds like she has some morals and values so I don't think she'd be comfortable with that situation, anyway.

Her job, on the other hand...it sounds like more or less a commodity job- ie one she could get anywhere. Grocery store- what, 10 bucks an hour? Has she looked into the BMW plant or something similar down there?

What's the deal with child care, and ferrying the littles around? One can't be single, working 40 hrs a week, and not dealing with child care. That sounds like part of the equation, too.

Any child support from the ex?

Just trying to get enough of the story to help make a decision. And again, the numbers matter. 400/mo for 72 months is a helluva lot different from 400/mo for 48. I'm guessing she financed this thing for 6 years, based on what you told me. $377 times 72 months is over 27 grand. On a Mirage. How long is the warranty on that thing, anyway?

If anyone could use a lightly used Prius...it's this woman.

I don't get the patio reference. Enlighten me?

Feet are absolutely the most reliable source of transportation. Or a bicycle.

One bit of advice- it might work out better if you or another intelligent person calls the credit company for her. She's unfamiliar with all this- and might be too gunshy to really press the point. Just call- say you're her uncle or stepfather or fiance or something- and see if you can work out some sort of restructuring.

ProDarwin wrote: I hesitate to ask this next question because a lot of people here think its crazy... How far from work is she? Can she rent a different place closer to work/the store? Then let the car get repossessed, drop insurance, stop paying for gas, etc. My feet are more reliable than *any* car, and cost a whole E36 M3load less.

With 2 very young kids, a vehicle is probably a necessity.

mtn wrote: Look at it from their point of view: They have someone who is likely going to end up defaulting on the loan. They would then repo the car, and sell it, and have an unsecured loan for someone who will likely then loose their job and end up filing for bankruptcy. They don't want that either. There is a good chance they'll work with her, if they're reputable.

Assuming that their business model isn't "then we get someone else with no credit on the hook for $400 a month, repo the car when they can't pay, and repeat". I'm guessing there's probably around 30 to 36 payments left on this loan. It might be worth talking to the lender to see if they can do something that reduces payments. If it's more like 48 payments - I'd try finding a new lender with a better rate.

But it seems like the best way to approach this may be just to figure out if she has any options for finding more money to throw at this loan - or if she has other, smaller debts, finding more money to pay off those debts first and then redirect the money to the car loan. For example, would it be possible to put in a little overtime at the grocery store? I know that's not a great answer as a single mother isn't exactly going to have a lot of spare time, but it may be a workable option.

In reply to volvoclearinghouse:

I agree!

$400/month car

$200/month insurance

$500/month rent

+$500 in child support just starting this last month was offset by a corresponding reduction in food stamps.

We're trying to get her a better job. I' working with her on a resume for something which can grow.

Agreed that cheap cars are only good for middle class +, My car is broken right now, so I am working from home, mostly because I can anyway, because I have a great job with great benefits. Nobody even bats an eye. Her car breaks twice, her grocery store income is gone.

She has people from all over watching kids at various times. We were those people yesterday, hence the discussion.

When I heard the residual value on that car, and the monthly payment, I almost threw up in my driveway. When I leased a Leaf it was $240 and $0 down. She's paying 3 series money for a Mirage and the value is sinking faster than I could have possibly imagined.

Note 1: Don't be poor, it's too hard

Note 2: Don't ever buy a brand new Mitsubishi ever

Note 3: Do not ever get divorced

Note 4: Leasing is better than being upside down

volvoclearinghouse wrote: I don't get the patio reference. Enlighten me? Feet are absolutely the most reliable source of transportation. Or a bicycle. One bit of advice- it might work out better if you or another intelligent person calls the credit company for her. She's unfamiliar with all this- and might be too gunshy to really press the point. Just call- say you're her uncle or stepfather or fiance or something- and see if you can work out some sort of restructuring.

That last one is a good idea, I may offer my services.

The last people I dis this with (prescription insurance) still rue the day(s) I called them - I have a bluetooth headset and I write boring E-mails a lot, I can tie up a lot of CSR time.

Margie, co-owner of GRM, once threatened, I think, to bury people in her patio because they were "discussing" controversial political issues. There are several underlying here which are part of this problem, but can be avoided for the sake of our gracious host.

STM317 wrote:

ProDarwin wrote: I hesitate to ask this next question because a lot of people here think its crazy... How far from work is she? Can she rent a different place closer to work/the store? Then let the car get repossessed, drop insurance, stop paying for gas, etc. My feet are more reliable than *any* car, and cost a whole E36 M3load less.

With 2 very young kids, a vehicle is probably a necessity.

There is no place cheaper to rent than what she has now that I know of.

She cannot walk to work and also bring two kids to child care, which is never at her home.

As STM317 stated, a car is a necessity here.

She needs more money to fix this faster. Any skills for Fiverr? Can the car be an Uber or Lyft? A Turo rental? Amazon Mechanical Turk? AirBNB?

What about the rest of the finances? Is the insurance the cheapest? Will the cell phone company give her a loyalty break? Is a flip phone good enough? Does she need cable TV right now? Is she eligible for public assistance? Does her employer offer benefits she isn't using, like childcare?

If she smokes, an employer stop smoking plan, if it exists, has to be, at worst, revenue neutral for her.

volvoclearinghouse wrote: you or another intelligent person ...

If I read that right, that might be the nicest thing you've ever said to me.

Mike wrote: She needs more money to fix this faster. Any skills for Fiverr? Can the car be an Uber or Lyft? A Turo rental? Amazon Mechanical Turk? AirBNB? What about the rest of the finances? Is the insurance the cheapest? Will the cell phone company give her a loyalty break? Is a flip phone good enough? Does she need cable TV right now? Is she eligible for public assistance? Does her employer offer benefits she isn't using, like childcare? If she smokes, an employer stop smoking plan, if it exists, has to be, at worst, revenue neutral for her.

We've gone down all those roads, she's living as cheaply as possible from what I can see, and she has zero extra time.

tuna55 wrote: Margie, co-owner of GRM, once threatened, I think, to bury people in her patio because they were "discussing" controversial political issues. There are several underlying here which are part of this problem, but can be avoided for the sake of our gracious host.

Man, "the patio" used to be a massive running joke on the board. We had memes.

In reply to tuna55:

After I wrote that, I thought that perhaps I should rephrase it. But what the heck, I'm feeling generous today..

$2400 per year for insurance hardly seems like the best deal possible. I have a fleet of cars insured, for my wife and I, and our yearly bill is much, much less than that. I understand she has zero cash but she might want to look into getting a higher deductible- what's the difference between a $200 deductible plan and a $1000 deductible plan? The deductible is only for collision only- so tell her to drive cautiously, drive only when absolutely necessary, and save the difference.

Also- a guy at work recently moved and changed counties- and his insurance rates for his car doubled. Living in a bad area makes car insurance more expensive. Of course, so does having piss poor credit but she's working on that.

The only way to reliably make "cheap" transportation work is if you have multiple cars, or flexible work arrangements. But I do worry about that Mitsu, and the warranty, and how reliable it's going to be going forward. Especially if it starts pushing around a whole load of deferred maintenance, which is likely to happen when one is cash-poor.

This thread has inspired me.

Tuna, you'll have mail in a few minutes

In reply to volvoclearinghouse: Unfortunately, being very young and having bad credit are two big strikes against her getting cheap insurance. But I agree, it feels like there is potential for savings there.

Tuna, I (and I believe most of us here) applaud your effort to help this young lady. You are one of the good ones in this world and hopefully you can help her get her (and her kids') life into a place that's better than survival mode.

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.

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.

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.

And even that probably wouldn't help. If one is terrible handling a little money, they'll be terrible handling a lot of it. Just on a larger scale. There's nearly as many stories of lottery-winner bankruptcies as there are stories of lottery winners.

I agree- some people can't be helped. But some can. Hopefully this is the latter situation. So ask yourself- or maybe more accurately, ask her- what's the first thing she does when the Mitsu is paid off- and she has that extra cash every month? How much credit card debt is there? How quick can that get paid off? Any other debt?

A lot of people trade in a car on a new one, but don't get enough for the trade to cover what is owed, so they roll the additional money owed onto the loan for the new car as well. Easy way to screw yourself even more.

The money owed isn't going away. Banks don't care about you and your crappy situation. I think the only real options are refinancing to get a lower rate and longer term. This of course, is just a band aid. A longer term just means you are paying down the load even less on a depreciating liability.

I say this kind of jokingly, but could she team up with the lady living out of her car that you posted about recently? It may be a bit of an "Odd Couple" scenario, but it could be mutually beneficial. The car lady gets a place to live that's not a car, the single mom gets somebody at her place to watch the kids, and they both get to split some of their bills and gain some breathing room with the extra money.

Sidenote, I appreciate and respect your servant-like attitude. Keep helping when/where you can in order to make the world better.

In reply to STM317:

Funny, I thought of that lady when I read this thread, too.

I know a couple of situations like this...like a bunch of 20-somethings scraping by renting a house together...or some older ladies, and one of them's brother, all sharing a house. You do what you gotta do...

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.

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.

Sadly at some point deep down in the poverty pit it becomes more expensive to own a cheap used car than to buy a new one in the short to medium term, even though the new car can very easily come back to bite you in the ass later, as seen in this thread. And that's not even getting into the amount of depreciation you'll need to absorb. So you can see why someone who needs a car might buy a new one out of desperation even if their income says they have no business owning one.

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.

tuna55 wrote:

volvoclearinghouse wrote: you or another intelligent person ...

If I read that right, that might be the nicest thing you've ever said to me.

hopefully, he didnt forget a coma

volvoclearinghouse wrote: you or another, intelligent person ...

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*.

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 (Edit: Choosing a German money pit as an example being one of them), 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.

BTW, I also recommend owning 2 computers and having at least 2 full bathrooms in your house for the same reasons...

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.