An open rant to BKers buying non-inexpensive cars

[joshuagraham]

I seem to be reading about a lot of folks here who just a year or so out of BK discharge financing cars priced at $30K+.

It would seem to me that we should all be thinking about how NOT to get stuck wit big bills anymore. With cheap new cars going for $13K (sure, not a lot of "soccer mom" space, nor "fahrvergnügen"), but at a lot less of a note! Every one of us coming out of a discharge is de facto broke, and it seems that it would behoove us to try and be a lot more wise in our spending decisions, at least until we have really built up enough cash that Suzy Ormond would allow us to "buy".

[mynameainttracy]

The two most significant things that started my financial dominoes falling was an expensive car and a bad mortgage loan. I will never let that happen again.

[TXskyblue]

My current car (2012) is probably too expensive for me. I wish I had a more inexpensive (and thus basic) car.

I thought about trading it in, but it doesn't really make sense to do so. I have a few K equity, but if I bought a new vehicle for 18K, I'd owe about the same as I do now. I'd lose my equity since I'd have to take the new car hit for the second time.

[Drazil65]

I agree, I see people financing ridicules amounts for cars, before and after bankruptcy. I see people very excited about the fact that they were able to get a loan for a $20k plus (and in many cases much more as the op stated) and proud of it. I don't get it at all as the slippery slope begins again. Of course you will probably find someone to finance that amount, you cannot get out of this one by filing and the creditors know it, they got you. Some people learn and some don't (seems many don't) but life happens and this was your chance to set yourself up to weather the storms much better. I don't get it?

[Pandora]

I'll never finance another vehicle...and will never pay for a "brand new" vehicle again - why? Depreciation starts the minute you sign the paperwork. We just bought our son his first car...for $600 - from a relative. Paid for in cash and its his.

I guess the main reason some people choose to finance a brand new car (or newer) right out of BK is because they dont have any $ saved up to pay all at once for a car. To me, thats their choice, but if you have a car already, why not just save that monthly payment you were planning on spending for XX amount of time and buy an upgrade to what you're currently driving? Lots of nice well taken care of cars for under $5K.

[ksgirl38]

I guess the main reason some people choose to finance a brand new car (or newer) right out of BK is because they dont have any $ saved up to pay all at once for a car. To me, thats their choice, but if you have a car already, why not just save that monthly payment you were planning on spending for XX amount of time and buy an upgrade to what you're currently driving? Lots of nice well taken care of cars for under $5K.

Sometimes a new car can't wait. Not to mention that the new loan can also help you with rebuilding your credit. There aren't a lot of people with $20,000 just lying around to purchase a new car and if they do have that I would certainly question why they filed BK in the first place.

[LadyInTheRed]

Sometimes a new car can't wait. Not to mention that the new loan can also help you with rebuilding your credit. There aren't a lot of people with $20,000 just lying around to purchase a new car and if they do have that I would certainly question why they filed BK in the first place.

Then perhaps they should buy a used car, even if they do have to finance it. Rebuilding credit is not a good reason to make a $20,000 purchase when a suitable alternative can be had for much less.

[kjrmom911]

I agree with this. I am still driving my 2006 Honda Civic with 130,000 some miles on it. I don't intend to buy anything "new" anytime soon. My car has lots of mileage still to go and when I do have to get a new one I will be sticking with a low mileage older car. So not worth it to go into debt for a car. It is only a means to get from here to there. 1 year to go in my chapter 13.

[ksgirl38]

Then perhaps they should buy a used car, even if they do have to finance it. Rebuilding credit is not a good reason to make a $20,000 purchase when a suitable alternative can be had for much less.

I don't find used cars to be reliable. You never know how well the previous owner took care of it and I've had more problems with used cars in a short time period than I ever have in the 10 years I've had a car I bought new. A used car is a good short term option, but not necessarily long term. Exception would be a new driver. I don't think anyone buys a new car just to rebuild credit. I had to do it twice out of necessity.

[LadyInTheRed]

I don't find used cars to be reliable. You never know how well the previous owner took care of it and I've had more problems with used cars in a short time period than I ever have in the 10 years I've had a car I bought new.

There are ways to make sure you are buying a reliable used car and that the new owner took good care of it. Educate yourself on how to evaluate the car and what to look for when test driving. Check on the reliability records for the make and model of car you are looking at. When you find a car you like, ask for service records and have a mechanic check the car out before you buy it. There are also online services like Carfax where you can enter a VIN number to see service records, registration records and accident history of a car before you buy it. While not all mechanics participate in the database, you can see how many owners the car has had, whether it has been involved in a major accident and confirm that the odometer has not been set back. You can often also be reassured by a record of routine maintenance. My husband decided which used truck to buy by choosing the one with a Carfax report that showed it received maintenance at recommended intervals.

I don't think anyone buys a new car just to rebuild credit.

But you suggested it as a factor in a decision to finance a car.

Not to mention that the new loan can also help you with rebuilding your credit.

I don't think rebuilding your credit should play any part in deciding whether to make a large purchase.

[Pjmax]

I don't find used cars to be reliable. You never know how well the previous owner took care of it and I've had more problems with used cars in a short time period than I ever have in the 10 years I've had a car I bought new. A used car is a good short term option, but not necessarily long term. Exception would be a new driver. I don't think anyone buys a new car just to rebuild credit. I had to do it twice out of necessity.

My experience has been just the opposite. I've had 3 new cars in my lifetime, and all 3 spent more time in the shop the first year or two than any used car I've had. One new car had things falling off it as I started to drive off the lot (true story.)

I also would rather buy an affordable 2-3 yr. old vehicle with more bells & whistles that I prefer, rather than a stripped-down, shiny new basic car for the same price or more, that I won't be comfortable with in the long run, that's just my preference.

There are still a lot of people who regularly trade in their 1-owner, well-maintained vehicles every 2 yrs or so. They take a bit longer to find, so it does help to start looking before the current car dies. My last (current) car took me over 7 months to find at a really good price.

[ksgirl38]

There are ways to make sure you are buying a reliable used car and that the new owner took good care of it. Educate yourself on how to evaluate the car and what to look for when test driving. Check on the reliability records for the make and model of car you are looking at. When you find a car you like, ask for service records and have a mechanic check the car out before you buy it. There are also online services like Carfax where you can enter a VIN number to see service records, registration records and accident history of a car before you buy it. While not all mechanics participate in the database, you can see how many owners the car has had, whether it has been involved in a major accident and confirm that the odometer has not been set back. You can often also be reassured by a record of routine maintenance. My husband decided which used truck to buy by choosing the one with a Carfax report that showed it received maintenance at recommended intervals.

But you suggested it as a factor in a decision to finance a car.

Not to mention that the new loan can also help you with rebuilding your credit.

I don't think rebuilding your credit should play any part in deciding whether to make a large purchase.

I did educate myself, CarFax said nothing and there's no way to know that the windows were going to get stuck on cold days or water was going to leak from the windshield until it rains or any of the other problems I had.

I did not suggest anyone finance a car for the sole reason of building credit. Most car purchases are based on need and the financing is left up to the individual person. Please don't put words in my mouth. I know very few people sitting on $20,000 after just declaring BK. Not to mention that if you get a loan at $0 interest anyway then having that loan on your credit report showing regular payments would help your credit. There would be no benefit to paying it in full if you can use that loan to help your credit score and still gain interest on the money while it's sitting in your bank account.

[ksgirl38]

My experience has been just the opposite. I've had 3 new cars in my lifetime, and all 3 spent more time in the shop the first year or two than any used car I've had. One new car had things falling off it as I started to drive off the lot (true story.)

I also would rather buy an affordable 2-3 yr. old vehicle with more bells & whistles that I prefer, rather than a stripped-down, shiny new basic car for the same price or more, that I won't be comfortable with in the long run, that's just my preference.

There are still a lot of people who regularly trade in their 1-owner, well-maintained vehicles every 2 yrs or so. They take a bit longer to find, so it does help to start looking before the current car dies. My last (current) car took me over 7 months to find at a really good price.

Depends on what you are buying. I see a lot of vehicles on the road I wouldn't waste my time on. For me reliability is more important so I'll pay an extra $4000 if it means I won't be stuck by the side of the road.

[LadyInTheRed]

Please don't put words in my mouth.

I didn't put any words in your mouth. I simply responded to your words as written.

I did not suggest anyone finance a car for the sole reason of building credit.

I didn't meant to imply that you did. You think it's okay for the positive effect on your credit report to play some role in the decision to buy a $20K car. I don't. We disagree. That's okay.

I know very few people sitting on $20,000 after just declaring BK.

Your missing the point of the thread. Why does anybody fresh out of BK NEED a $20K car? Actually, the OP said $30K plus, but even if you feel you must have a new car, there are several cars on the market with MSRPs around 12K and nobody should pay MSRP.

Not to mention that if you get a loan at $0 interest anyway then having that loan on your credit report showing regular payments would help your credit. There would be no benefit to paying it in full if you can use that loan to help your credit score and still gain interest on the money while it's sitting in your bank account.

Of course, if somebody fresh out of BK can get a 0% loan. I would take the credit report factor out of the decision and base the decision on the fact that you can earn money on the savings while paying 0% on the car loan. But, the topic of this thread is not about financing a car that you have the cash to pay for. It's about people making poor financial decisions by taking loans to buy high priced cars after BK. As you say, these aren't usually people who have the cash around to buy a car.

[ksgirl38]

Actually, the OP said $30K plus, but even if you feel you must have a new car, there are several cars on the market with MSRPs around 12K and nobody should pay MSRP.

Most of those are the equivalent of a tin can on wheels. Not to mention that if you live in the midwest you are guaranteed to get stuck in the snow in one of those. The Toyota Prius comes to mind, but to each their own.