She may want to consider getting gap insurance. If she is that far underwater on the car if she were to get in an accident she could end up without a usable car, and still owing $6K. I know adding more monthly expense doesn't seem appealing, but in this case the protection it provides may be worth it.
Driven5 wrote: 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 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.
Depends, how is the resale on the car? I can help someone slap a car together to get back and forth, even without fenders and such, if need be. There is a little bit of a gamble for sure, but in some cases it makes sense.
Devilsolsi wrote: She may want to consider getting gap insurance. If she is that far underwater on the car if she were to get in an accident she could end up without a usable car, and still owing $6K. I know adding more monthly expense doesn't seem appealing, but in this case the protection it provides may be worth it.
Interesting point.
tuna55 wrote:Devilsolsi wrote: She may want to consider getting gap insurance. If she is that far underwater on the car if she were to get in an accident she could end up without a usable car, and still owing $6K. I know adding more monthly expense doesn't seem appealing, but in this case the protection it provides may be worth it.Interesting point.
Insurance would pay out the $4k the car is worth, but she would still be on the hook for the other $6k owed to the lender.
tuna55 wrote:Driven5 wrote: 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 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.Depends, how is the resale on the car? I can help someone slap a car together to get back and forth, even without fenders and such, if need be. There is a little bit of a gamble for sure, but in some cases it makes sense.
Deductibles don't just apply to single vehicle accidents. If anything goes through insurance, then the insured will generally be on the hook for the deductible anyways...Even if just 'temporarily'.
tuna55 wrote: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.
Some states have minimum requirements as well. It is illegal to drive without insurance.
Devilsolsi wrote:tuna55 wrote:Some states have minimum requirements as well. It is illegal to drive without insurance.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.
Was gonna say this, bet the loan stipulates a max deductible of like $500, if not less.
This kind of sounds a lot like a girl I work with. Was a teenage mother, two kids with two different guys, history of poor financial decisions, zero role models for responsible financial behavior, ect. But she's a hell of a worker and had another lady here take an interest in showing her the way back onto her feet. Buckled down and paid down debts, stopped spending irresponsibly, rebuilt credit, took as much OT as she could get, and so on and so forth. And now she's just bought herself a house.
I have no great wisdom to offer, other than to say success stories are out there. And Tuna, you're a good man for helping out.
tuna55 wrote:volvoclearinghouse wrote:Bigger. We'll contact you in a few days. It's a neat idea.tuna55 wrote:What are we talking about, some sort of GO FUND ME or something?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.
I'm guessing a GRM version of community lending.
Zero/low interest with the risk spread across hundreds of individuals ("lenders") to minimize risk. There would still be financial responsibility to pay it back, but much friendlier terms.
But I'm just guessing...
In reply to Furious_E:
That's sadly a common situation now. Most people have little understanding of loans, money management etc and it's super easy to get into trouble. I was fortunate that when we got in trouble I was able to work enough overtime to eventually get back into a decent place but most can't.
Is this the main source of her debt, or is this the straw that broke the camels back? If it's just the car- is this really a big issue in the grand scheme of things? If owing $10k on a car is the wake up moment in her young life, I'd say she didn't do too bad. Most people get into a much bigger hole than that. I'm reading recommendations of repo, bankruptcy, etc, for a realatively small sum. If she was 65, or unable to work, that might make sense. But she's young and working. A couple years from now she will laugh about what a big deal this car payment seemed to her. $400 is high for her income. But $0 isn't reasonable either, so she's not $400 in the hole. So say she should have bought a $200 a month car. That makes her only $200 short. $50 a week. That's delivering pizzas a couple nights a week, or cleaning houses. Maybe something she can do from home part time. My point is, if the math doesn't work so well on the car side of the equation, so put a little more on the work side of the equation. Or go after a higher paying job. The perks from the grocery store are good, but not if they are preventing her from looking for a higher paying job.
Statistically we are an amazingly affluent community. (We meaning GRM) I bet the forum members could raise 10k and ask her to fund 5 $2k challenge teams over the next 5 years and everybody would be better off. She has a car with no interest and deferred payments, and we get 5 teams competing in crap cars - maybe even old Mitsubishi Mirages.
In reply to Johnboyjjb: it certainly seems that way at times. But there are folks here who are struggling along quietly.
Again flirting with patio status: this young ladies' situation reminds me of a thought experiment I had several years back. What percentage of women have turned to the "oldest profession" at some point in their lives? Not necessarily cash but barter/trade/whatever...... I suspect the number is higher than many would think.
Edit: this is in no way suggesting that. Simply wondering about the population at large, not any one in particular.
In reply to KyAllroad:
I don't know... in this situation, that would seem a bit extreme. However, I do get the impression web-cam work in on the rise, although that would present an entirely different set of risks.
Driven5 wrote: 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.
Its a gamble, yes, but pretty much anyone can scrape together a grand with a credit card. You don't even need a cash advance- just pay everything you normally would pay with the card, and save your cash up. It sucks, and you'll be paying interest, but lay the odds that you'll actually need to do that versus the money you'll save by carrying a 1000 deductible vs a 200 deductible, and you will be money ahead.
I carry a 5k deductible on my homeowner's insurance. My logic being, I won't even file a claim if its under 5k anyway.
KyAllroad wrote: In reply to Johnboyjjb: it certainly seems that way at times. But there are folks here who are struggling along quietly. Again flirting with patio status: this young ladies' situation reminds me of a thought experiment I had several years back. What percentage of women have turned to the "oldest profession" at some point in their lives? Not necessarily cash but barter/trade/whatever...... I suspect the number is higher than many would think.
I've known at least one. Like you said, barter deal, not straight up cash-for-performance.
And at least one guy, too. Yeah, it can work both ways. Read into that however you like.
If the thought is some sort of group lend idea, count me in for a C-note at prime. 
So, if she ever reads this, some elements of those last few comments might be better left deleted.
VCH, thanks for the offer. I'll explain more later today.
KyAllroad wrote: In reply to Johnboyjjb: it certainly seems that way at times. But there are folks here who are struggling along quietly.
Don't get me wrong. I understand that completely. But as a GRM readership, the average income is almost double the national average. The results of the last survey I saw, from GRM, says we are, as a group, affluent. And some of the threads on here about managing wealth imply that we aren't taking that much higher than average income and burning through it. There are years where I have ticked the smallest income box available on that survey and dreamed about being on the top end of the smallest income box.
I wouldn't go so far as to say we are affluent, just better at managing money verses the average Joe, hence threads like this. I feel way more comfortable asking opinions about money here, than anywhere else.
tuna55 wrote:
I want to vote that up more than +1
I got her to apply for another refinance loan. She's at 17.65% now.
Three years in a six year note
mtn wrote: What is the rest of the situation--income, other debt, other assets? It is a pretty lousy situation, and she'll be losing money. I'd start by calling the creditor, if it is a reputable one, and simply stating "I cannot afford the payments and understand that I'm well upside down on this loan; what do you recommend" They may be willing to put her on a workout/settlement plan. Probably will hurt her credit score, but it might not. Sometimes they'll extend the loan to lower the payment--but note that the balance is still the same, and she would need to keep the car the entire time. The other option they may present is a voluntary repossession. She basically gives the car back to them, they sell it at auction, and then she has an unsecured loan for the difference. The Bank would walk her through theoptions with that, i.e. what her new payment would be, rates, etc. And she'd be out a car. Auction sales are way lower than private party--sometimes they'll let you sell the car private party and release the lien. Frankly, depending on other assets/debts/other situations, she may need to seriously look into bankruptcy. Probably not a good decision, but again we don't know enough to pull it off the table entirely.
We were im a similar situation woth swmbo. To make matters worse, the car E36 M3 the bed. So, we snagged a decent loan on a cheap versa before her credit took the hit, and proceeded to let them have their broke E36 M3box back. Saves her 150$ a month for a better car.
tuna55 wrote: I got her to apply for another refinance loan. She's at 17.65% now. Three years in a six year note
I figured it was a 72 month loan. The last time I went into a car dealership (not for me, going along with someone else who was buying) that seemed to be the "default" loan everyone was pushing. 72 months on a 12,000 car.
Something doesn't jive, though. If you go HERE and type in 12k at 17.65 for 72 months, you get a monthly payment of $271, with total paid of around 19,500. How is her payment almost $100 per month more than that?
In reply to volvoclearinghouse:
The cost of the car was basically 17,500
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