Help With Car purchase during open Chapter 13 BK

[159515951]

The rates obviously suck, but I'm just happy to not have a car that doesn't need $500 in repairs every month. Or even worse, using one of those shady buy here/ pay here places, where they want you to pay $20k for a 15 year old vehicle 165k miles. No thanks!

I have a hard time with this line of thinking, and I see it constantly on this forum. Our car has 190k miles, and it needs occasional repairs. For some reason, people consider that a HUGE hardship, but have no problems at all parting with thousands of $$ down and a loan shark interest rate for 5 years to drive a used car that will absolutely have the same problems in a few years.

The $4,500 down payment mentioned earlier could buy a new engine in most cases, with a new transmission thrown in for good measure. I think people get high repair estimates from dealers rather than going to independent mechanics, and then dump their cars in favor of 60+ months of indentured servitude to predatory finance companies that aren't much better than payday loan stores. Then they do a countdown until the end of the Chapter 13, while seemingly unaware that the high car payments will continue for much longer with much worse terms than the Chapter 13.

IMO, taking a loan like that is the first step towards more credit problems in the future. Please try not to take this personally if this applies to you -- I'm just offering a counterpoint for someone on the fence between paying $2k in repairs v. putting money towards a new/used car.

[papie]

I have a hard time with this line of thinking, and I see it constantly on this forum. Our car has 190k miles, and it needs occasional repairs. For some reason, people consider that a HUGE hardship, but have no problems at all parting with thousands of $$ down and a loan shark interest rate for 5 years to drive a used car that will absolutely have the same problems in a few years.

The $4,500 down payment mentioned earlier could buy a new engine in most cases, with a new transmission thrown in for good measure. I think people get high repair estimates from dealers rather than going to independent mechanics, and then dump their cars in favor of 60+ months of indentured servitude to predatory finance companies that aren't much better than payday loan stores. Then they do a countdown until the end of the Chapter 13, while seemingly unaware that the high car payments will continue for much longer with much worse terms than the Chapter 13.

IMO, taking a loan like that is the first step towards more credit problems in the future. Please try not to take this personally if this applies to you -- I'm just offering a counterpoint for someone on the fence between paying $2k in repairs v. putting money towards a new/used car.

I think people need to weigh the pros and the cons for their own situation. When I said $500 in repairs every month, I literally meant $500 for mechanical repairs, not $500 in maintenance. I think that's a pretty extreme amount to drop on a car on a regular basis with over 200k miles. I also have a long commute and don't really know anyone in my area. So dropping off a vehicle for repairs means I need to also rent a car or call a cab to get to work (no public transportation here). Not to mention the tow truck bill I had to pay just to get it to the mechanic last time. And the fact that my job sometimes requires me to travel hours away. I've also paid to repair a few transmissions in my lifetime, which is about as far as I will go, dropping an engine in a high mileage 10+ year old car which more than likely has multiple other mechanical issues is not generally the brightest decision one can make. Most mechanics wouldn't even suggest doing this. There is a vast difference between dropping a few thousand on general maintenance and dropping a few thousand on major mechanical issues. I think anyone who has to commute or travel on the regular would agree that having a good, reliable vehicle is absolutely necessary.

So personally, I couldn't care less about finance charges, because having a vehicle that actually runs is very valuable to me. It will be paid off in under two years. It's a Honda Civic with under 40k miles, so chances are it's going to run for quite a while.

I would suggest, however, that people taking out a higher interest loan need to make sure they get a reliable car with low miles and pay that baby off ASAP. If that means you have to get a cheaper car you don't necessarily want, so be it, but don't take 5+ years to pay it off.

[159515951]

So personally, I couldn't care less about finance charges, because having a vehicle that actually runs is very valuable to me. It will be paid off in under two years. It's a Honda Civic with under 40k miles, so chances are it's going to run for quite a while.

I would suggest, however, that people taking out a higher interest loan need to make sure they get a reliable car with low miles and pay that baby off ASAP. If that means you have to get a cheaper car you don't necessarily want, so be it, but don't take 5+ years to pay it off.

And here's the key difference in your situation -- you're paying it off quick, and getting something that will run for a long time after payoff. Unfortunately, many people paying 15% interest cannot find the extra cash to pay it off quick, which means the car is quickly worth far less than the loan amount, which is a bad situation to be in.

The new engine example was only an example to show what that huge down payment could pay for. Unless you're dealing with a BMW or a Porsche, nearly anything can be fixed without taking out a 2nd mortgage on the house. In my case, every month that DOESN'T require a significant repair means money in the bank towards paying cash for a new (to me) car. This strategy has kept me from having to finance a car, and it's one I plan to continue. I'm a Dave Ramsey wacko, so you have to keep that in mind when reading my comments.

Thanks for your thoughts and good discussion.