New-to-us car

[nick__45]

Hey all,
Hubby and I just bought a used car (certified pre-owned with a warranty y todo!) and I had a question about the car loan.

In terms of paying off the loan, should we pay more than the minimum payment to pay it off faster or is it better to pay the minimum to pay it off over time to improve credit score? Any advice would be great.

Hubby's credit stinks and the car is entirely on his credit so I'd just like to know what you would do in this situation. The loan is for 72 months, APR of 15.62%, for $11,811.29.

Thanks in advance!

Can you at least tell us what car it is. Make and model as well as the dealership/lender you got it from. I drive a 92 Corolla with over 300k miles and I make over $100k. Trust me, I like cars and all type of cars but I don't even think I am in position to buy a $12k car. I am in a $5k market at my salary range. While I am not as wise like some folks here to invest money properly instead of keeping cash (well, history will tell who's wiser) in this tough time, I am not crazy to spend $12k on a car when I can put that toward a small piece of land somewhere. The only way I would spend $12k for a vehicle now is if it has a family value investment or work investment, which usually mean a work truck with gears or some specialties such as a ice cream or landscraping trucks.

[disneysteve]

I like cars and all type of cars but I don't even think I am in position to buy a $12k car.

This wasn't a 12K car. It was a 17K car. They put down 5K. They borrowed 12K.

[nick__45]

This wasn't a 12K car. It was a 17K car. They put down 5K. They borrowed 12K.

$17k used car for a person with bad credit? This has to be a April Fool joke. Either that or I am a fool for saving and living frugally.

[KiwiJo09]

$17k used car for a person with bad credit? This has to be a April Fool joke. Either that or I am a fool for saving and living frugally.

I didn't ask for insults. I asked for advice. And my hubby's car was falling apart, which is why we decided to buy a car. If it was anything else, we wouldn't have done it. And this is the first car we've ever purchased. Did we do our research 100%? No. And I realize that we've made mistakes, but I'm going to stand by those. I don't want this car on my credit, which is why is isn't. My family complicates things too much for me to put the car under my name. I'm just going to leave it at that.

[disneysteve]

my hubby's car was falling apart, which is why we decided to buy a car.

KiwiJo, the insults are inappropriate but if you can look past them, the concern is legitimate. Okay, your husband's car was falling apart. That is definitely a very valid reason to be car shopping. Buying a 17K car with a 15.62% loan wasn't a reasonable path to follow however. You had a $5,000 down payment. You could very, very easily have bought a good quality used car for $5,000. If you also wanted to borrow some money in his name to help build his credit, you could have borrowed $2,000 instead of $12,000.

Now that you have the car, you could probably correct this mistake, as I explained above. The fact that you aren't willing to consider that option is certainly your choice, but I would hope you can understand why it would frustrate many other people around here.

You asked us:
what you would do in this situation

and you said:
Any advice would be great.

What would I do? I would sell the car for as close to what I paid as possible, even if I took a loss in the process. Then I would go out and replace it with a used car that actually fit my budget. I would borrow a minimal amount toward the goal of improving his credit, not more than $2,000-$3,000 (at least not at that interest rate).

Your opinion may vary but you did ask for our opinions.

[KiwiJo09]

KiwiJo, the insults are inappropriate but if you can look past them, the concern is legitimate. Okay, your husband's car was falling apart. That is definitely a very valid reason to be car shopping. Buying a 17K car with a 15.62% loan wasn't a reasonable path to follow however. You had a $5,000 down payment. You could very, very easily have bought a good quality used car for $5,000. If you also wanted to borrow some money in his name to help build his credit, you could have borrowed $2,000 instead of $12,000.

Now that you have the car, you could probably correct this mistake, as I explained above. The fact that you aren't willing to consider that option is certainly your choice, but I would hope you can understand why it would frustrate many other people around here.

You asked us:
what you would do in this situation

and you said:
Any advice would be great.

What would I do? I would sell the car for as close to what I paid as possible, even if I took a loss in the process. Then I would go out and replace it with a used car that actually fit my budget. I would borrow a minimal amount toward the goal of improving his credit, not more than $2,000-$3,000 (at least not at that interest rate).

Your opinion may vary but you did ask for our opinions.

I did ask for opinions. And the concerns certainly have their place. All I want to say is that the insults are uncalled for.

I appreciate everyone's input. Thanks a bunch.

[disneysteve]

All I want to say is that the insults are uncalled for.

Agreed, and being a site moderator, I can assure you they will be addressed.

[KiwiJo09]

I'm seriously considering what you've said, DisneySteve. I'll ask hubby if he would go for that idea. I have such buyer's remorse.

[Pansori]

I know. We did it on a whim. And we know that we made a mistake by taking out such a large loan, but it's too late now and there's nothing we can do. We love the car..

Kiwi, I think this was your mistake. You should never make such a big purchase on a whim, such things should be seriously considered. 72 month loan at 15% interest is not good, and that is not even considering full coverage insurance. I understand you love the car now, but give it a few months, I am afraid that love may turn to animosity, especially if making the car payment suddenly takes precedence over other bills.

I would sell the car and go for something more affordable.

[disneysteve]

I'm seriously considering what you've said, DisneySteve. I'll ask hubby if he would go for that idea. I have such buyer's remorse.

Most car buyers get buyer's remorse with a new car but they are stuck with that decision. New cars drop in value the instant they leave the lot, sometimes by as much as 20%, so reselling a brand new car usually isn't feasible. In your case, though, the situation might be different (I'm not sure but I'd look into it). Used cars hold their value better since the initial depreciation has already occurred. Plus, you put down 5K. You paid 17K Even if you could sell it for 15K, I think you'd come out ahead in the long run. Yes, you'd lose 2K up front but you could pay off the 12K loan and still be left with 3K to put toward another car. Borrow maybe 3K, buy a 6K car and you'll be left with 9K less in debt.

That 9K at 15.62% for 72 months would cost you about $5,000 in interest over the life of the loan.

[nick__45]

Kiwi,

My comment was not meant as an insult. It is obvious that you have buyer remorse as far as finance is concern. Otherwise you wouldn't ask for advice or talk about it here. If we sugar-coat the response and say your husband deserves this car because it has been a rough few years or whatever, I think you two would make even bigger mistake soon. I see people getting a new house then buy a new truck to do house work, then a new car for commuting right on a starter salary. Then wham, one person looses his/her job and they goes into foreclosure about a few months because their cash reserve was spent on down-payments for two new vehicles. The last new we want for you is to run out and get another car when things temporarily improve for your family finance and you feel you deserve a nice car too since your spouse has one.

If I was you, I'd pay for that car off as soon as possible, hook or crook.

[snafu]

KiwiJo09: I acknowledge I lack diplomacy but wanted to express genuine concern about the decision to pay 15.6 percent interest for 72 months. 72 x $ 250. = $ 18,000. + $ 5,000.DP = $ 23,000. vehicle purchase not counting insurance, operation and maintenance costs. It would have been better to post these details while you were still considering the pros and cons of the purchase.

Since you 'loved the car', I didn't see buyer's remorse but I wonder if the vehicle can be returned to the dealership as 'not meeting your needs,' to select something else?

[disneysteve]

It would have been better to post these details while you were still considering the pros and cons of the purchase.

Sadly, this almost never happens. We rarely see a thread by someone asking, "Can I afford it?" (a la Suze Orman). We frequently see threads like this - "I already bought it. Now what do I do?" At that point, it is much harder to give helpful advice.

[nick__45]

Sadly, this almost never happens. We rarely see a thread by someone asking, "Can I afford it?" (a la Suze Orman). We frequently see threads like this - "I already bought it. Now what do I do?" At that point, it is much harder to give helpful advice.

The only person I know that ask "can I afford this" question is me. And usually, I already the answer and it is a yes but needed to hear from complete strangers, who probably has a much fresher and clearer view about purchasing and owning financialy responsible than me. Normally, I still talk myself out of buying even when the keyboard advisers say yes.

For example, I like to get a nice car right now and I know I can afford to pay cash or finance with absolutely 0% due to my very high credit score but I still wouldn't buy a nice car. It is a simple matter of the associate costs coming along with a new car. For my area, that would be yearly personal property tax, higher insurance, and bigger headache of owning something I can't emotionally and financially fix every little ding or scratch from usage. Therefore, owning a very used car is the answer for me. And I am a car person. Of course, this would change once my wife start working and our salary will be close to double. Until then, I enjoy shopping for cars.

[KennySoward]

Kiwi...yes, some folks just don't know how to put things nicely But, ultimately most everyone is right, and I think you get it.

I have made a lot of mistakes in my life financially, so I do not judge you at all. I have purchased a vehicle at 13% before...probably worse when I was younger and didn't even look at the interest rate anyway

Just pay it off at an escalated rate at least. Or, you can do what DisneySteve said unless you just love the car too much. You can either remedy the situation a little, or a lot.

Good luck either way.