Car Loan?

[hopelesslyflawed]

So I have a situation I feel I can't figure out but after two hours of reading posts here, there seems to be some very even and common-sense driven posters here and thought maybe I can get an unbiased opinion.

I have made horrible financial choices ever since I was able to make money. I admit I have issues with impulse/emotional buying. As 2008 came, I realized I need to change IMMEDIATELY...

I am divorced, and I have sole custody of our two children. I am supposed to receive $1252 a month from him. $680 for child support, the rest is his percentage of daycare costs. Currently I receive $437.

I make $17.50 an hour, I have no benefits so if the kids are sick or there is a holiday, I go unpaid.

Last May I made my worst decision to date and bought a car from a boyfriend (now ex). Within three months of buying the car for $2600 the transmission gave out and I was just able to sell it for $300 in December. So...my mother let me use her buick for transportation, she bought a new car. (God bless mothers....)

So here's the deal, my credit is bad. I have perfect rental history, and my cell phone, power, gas, water bill are all paid on time...but none of that matters on your credit unless you don't pay. I have one secured credit card with a limit of $200 and a balance of $140 that I pay $15 a month on.
I filed bankruptcy in 2003 with my ex-husband. I left him in 2005, and the car that we had a joint loan stayed with him...in late 2006 he abandoned the car and I didn't find out until I ran my credit in early 2007 and saw a $2300 debt...the car was 6 months away from being paid off. (oklahoma has some interesting laws on co-signing ...dont do it in that state ever)
I have divorce papers showing the debt is his, and have attached a consumer statement to my credit as to the situation.

My mom is ready for me to give her the car back...and she knows that with tax-refund I get an average of $6k back. Last year, I bought the $2600 car and paid for a quarter of school.

I need to go back to school....I owe the school $800 because Fall Quarter proved to be too much, but I withdrew too early and now owe financial aid.

My refund will be in my FAKE checking account, because I can't get a real checking account I've ruined my checking account history...tangent....my refund of $5700 will be in my account on Jan 25th. (my 26th bday)

I need to buy a car, I need to pay my school so I can go back ($800 plus $1400 for Spring quarter) I have to finish school...and I'm not even close to finishing.

What do I do? $5700 is a good chunk of money, but it's not a lot. I have bought two used cars in the last three years, spent thousands on repairs for the first one until it was totalled and lost $2300 on the second one....so it's so scary to go buy another $3000 car.....

Sorry about all of the history to get to a relatively simple question....I have read tons about improving your credit score and it seems nothing applies to me. I am in a waiting period where I just have to wait for things to drop off my credit....bankruptcy won't be off until 2010-2012 and other debts that I have paid off (utility bills past due etc.) are all due to fall off between now and 2009....

So, I can't get my credit score to go any higher...I've disputed everything I can. I have paid everything I can....but still if I were to finance a car, it would require the full $5700 down....and then no school??

I am a walking public service announcement for why people should wait until they are stable to have children and why parents should teach their children EARLY about financial management. I have amazing kids, but man they deserve so much better....

So...what do I do? My only expendable bill is my cell phone and my credit card payment. When the $5700 comes, I will put the balance of my secured credit card back to $200...and then take the card out of my wallet.

The easy answer is to buy a $3500 car...but I know no-one and have no one to trust when it comes time to buying a sound car that will last me two years.

help?

[MonkeyMama]

Here's my advice on buying a used car.

How To Buy a Used Car: Monkey Mama's Monkey Money Blog

If you live in a big city or larger area there is a lot more chances you can find a great deal on a used car. It can also take some time.

[bjl584]

For school, you may qualify for free or discounted tuition since you are a single mother. It depends on your income and some other factors. Have you looked into any programs like this?

As far as the car goes, you just need to do your homework. Make the owner/dealer run a history report on the vehicle for you. If you plan on buying from a private owner I would suggest only buying from someone that has kept detailed service records on the vehicle. If you still feel overwhelmed, you may want to ask around work or school for help. Chances are, there is someone there that will know enough about cars that could spot trouble and would be willing to go out car shopping with you on a Saturday to make sure that you aren't getting ripped off.

What is the interest rate on your credit card?

[Scanner]

Some basics on buying a used car:

1. Go with a model with reliable history (Honda Accord, Ford Taurus, Toyota Corolla)

2. Try to get a stick shift when possible. A clutch ($300-600) is much cheaper to fix than an automatic transmission ($2500-5000). Yeah, it's a pain to drive. . .but in the long run, cheaper to manage. A little better on gas too. They are harder to find nowadays, I'll admit.

3. When buying a car, look to establish a relationship with a good mechanic first, someone you can trust. Then. . .as you buy the car, he can guide you.

As far as the other stuff $17.50/hour isn't bad, are you sure school will produce a higher salary + benefits/healthcare?

IMO, if you establish yourself as a solid bill payor for a couple of years, you'll slowly gain your credit back.

If all businesses in America ever did business with were people with good credit, they'd be out of business.

I don't necessarily think you even have to plop down $3500.

Here's an example of a car near me that would fit your circumstances:

Vehix.com

They are asking $4300. . .I bet they take $2000-2500, especially during the month of February. It's stick, good on gas, got a lot of miles, but repairs would be managable. Now you have $3500-4000 as a cushion.

Good luck.

[cptacek]

I am supposed to receive $1252 a month from him. $680 for child support, the rest is his percentage of daycare costs. Currently I receive $437.

This is court ordered, right? Tell the court he isn't paying, and get his wages garnished. You shouldn't have to eat $800.

[disneysteve]

I am supposed to receive $1252 a month from him. Currently I receive $437.

I have one secured credit card with a limit of $200 and a balance of $140

tax-refund I get an average of $6k back.
my refund of $5700

So, I can't get my credit score to go any higher

I know little about buying really cheap cars, so I'll let others address that. I will weigh in on a couple other aspects of your post.

I would be aggressively pursuing the lack of support payments by whatever means necessary. Wages can be garnished for deadbeat dads. Getting the payments that you are due would help your situation tremendously.

I would use at least a little of your refund to raise the limit on your secured card. Then, do your best to not charge more than 30% of the limit. That may help your credit score a bit. Using too much of your available credit lowers your score. Right now you are at 70%.

STOP getting a 6k tax refund!! That is $500/month that the IRS is holding interest-free instead of you having it available to pay your bills. Adjust your withholding so that doesn't ever happen again.

Good luck.

[mike42]

Your tax refund is huge. Like Steve said, change your withholding on your W4.

That will reduce your tax refund each year -- but you'll get a larger paycheck every week (every other week -- depending on how you get paid).

That sounds like it will be a huge help for you with your cash flow issues.

[PrincessPerky]

Take a look at your pay stub..do federal taxes come out each pay? if so, adjust your withholding to claim more..I know they say one for self one for each kid and thats it, but they base it on the govt keeping your money.

If on the other hand that is all (or mostly) EIC, and unpaid by you taxes, not sure you should try to get it early.

As to the school, I am all for education, but if you dropped out early last semester, and you are still in financial straights, and still have two kids...you might want to put it off...Rome wasn't built in a day.

Ditto the pursue getting the court ordered money off the Ex.

Sorry no help from me on the car. (listen to the other folk, they are smart here)