Advice Please!! Pay off CC or Apply to new vehicle

[jaypelaz]

I have run into a unique situation...My toyota pickup which has been paid off for 5 years and is in great shape unfortunatley is involved in a recall in which toyota will buy back my truck at 150% of its value..My truck is listed on KBB at 11,600...So i should recieve a check for approx 16,600...Ive known of this recall for a few years but my frame wasnt that bad so i wasnt concerned plus i love my truck...well its BAD NOW!! Unsafe bad...For the most part the deal is great..How else could u get that much for a 10 yr old vehicle with 140,000 miles on it...Here is my dillema...I have a $15,000 credit card i would LOVE to pay off with that money..but that would leave me with no vehicle...So in paying that card off i would have to finace a new or more likley a used truck...My credit card is through BOA and is @ 10.24 %....im paying a minimum of $300 a month...it dsnt seem to be goin anywahere fast either..most of it is debt accrued over the years for stuff for the house/yard..vacations..blah blah...Problem is we already have a car payment on my wifes car we just got a year ago and still have 5 yrs left...we dnt sav much a month and live well but cant afford more bills..We do not have bad credit at all but we had a heck of a time gettin approved for some reason for her car loan..i also have a very small motorcycle oan for 2,000 at 75/mnth...I think i might have a hard time gettin a loan right now...logic tells me that get rid of the credit card at 300 a month and get a car loan for the new truck at 300 or less a month and its a wash plus i will DEF have that paid off within 5 yrs or less but if i use the money to buy a new truck the credit card may be around for much longer...this has to happen soon..i feel real rushed..any insight or suggestions?????thanks

[disneysteve]

Welcome. Here's what you need to do:
1. List your total household income.
2. List your total monthly expenses.
3. List your total debts including current balances, interest rates and minimum payments.

Without any more info, I'd say this. Sell the motorcycle. You can't afford it and you don't need it. Your wife is driving a car that you also can't afford. How much is it worth and how much do you owe?

Do you have any savings?

Just wipe the thought of buying a new vehicle completely out of your head. That shouldn't even be a consideration. I'm suspicious about the car deal you are reporting. I can't imagine Toyota actually doing that. But assuming it is true, I would take the $16,600 and use $5,000 for a used truck and put the rest toward the credit card. That won't get it paid off but it will knock it down considerably. Keep paying $300/month and in just over a year, it will be gone. If you sell the motorcycle, put that money toward the CC also and it will be gone even faster.

You need to STOP borrowing money to finance your lifestyle. Pay cash for everything. If you don't have the cash, don't buy it. It is that simple.

Start listening to Dave Ramsey and visit your local library and pick up his book The Total Money Makeover.

[mdcrim]

I agree with Disneysteve. Sell the bike. You got a 6 year loan on your wifes car? That is way much. I think the guidance is never buy what you can't afford on a three year loan. That being said, buy a beater and pay down the debt. When the cc is paid, start saving for the beater replacement. Just a thought.

[jpg7n16]

As long as the new car loan interest rate is lower than the 10% rate - I'd treat it as a sort of refi of the credit card debt.

Take whichever interest rate is lower (10.24% or new car rate).

So if you only qualify for a $10k car at 15%, pay for the car in cash. But if at 6%, then loan for car - pay off CC.


I'd also try and downgrade the car a bit to like a $6-8k used car. That would give you the max to pay towards this debt.




And DS got at the heart of your problem. You shouldn't be racking up CC debt, but you are, so that means your budget is likely out of whack.

[ferriwinkle]

I agree with the idea of selling the bike. Of course that depends on the reason you "need" a truck. Are you a contractor--do you use your truck for work? Or do you just like having a truck? Also, do you live in a sunny climate? If you do you could keep the bike and drive it to work, and then pay off your CC. Another option above would be to sell the bike, buy a beater (if you don't need a truck for your job, an old honda, mazda, -insert compact car here- would work, and get better gas mileage than a truck= more savings on gas), and use the proceeds, which should be around $12K to pay the CC. If you did that, then you would only have $3K left on teh credit card, and you could keep paying the $300 a month that you have been to pay the rest of the balance down fast.
hope this helps.

[terces]

I'm curious about this Toyota truck recall cause I have two 8 year old tacomas and haven't heard of it. Definitely post a link if you got it.

[snafu]

OP, How much have you already paid BOA in interest on your CC over the years? I suggest you check a credit card calculator to see the damage you are doing to yourself. Since you're asking on Saving.com I am jumping to the conclusion that you'd like to get to better financial status.