a loan to wipe out debts,get a new home and car?

Question

I owe back child support, taxes,credit card bills and I would like to get a home and a new car. This started about 4 years ago when I was laid off from a job I had for 14 years. I have had my current job for about 2 years and pull in about 3,500 a month. Is there a way to get a reasonable loan to resolve all these issues.

Answer 1

No. No can do.

By definition, if you take a loan then you have debt.

Any loan that is NOT collateralized will result in a high interest rate. The fact that you apparently do not have collateral already and are in debt means that you will pay high interest rates for any type of loan you get. A mortgage would be collateralized by the house (probably UNDER collateralized as there is a housing bubble going on), but you would still pay higher interest than someone with a better credit rating. Over the life of the mortgage this would be a lot of money.

May I suggest an alternative? Enjoy your relatively high income, and live in a modest apartment that is less expensive than what you think you can afford. If you REALLY need a car buy one at least slightly used, preferably using cash, as they depreciate extremely fast the first year.

Completely pay off your smallest bill. Then take the income stream that you used to make payments on it, and pay off the next biggest bill as quickly as possible. When that one is paid off, go for the next biggest bill. Keep doing this until they are all paid off.

Then start accumulating savings.

When you are ready to buy a house, you will get a LOWER interest rate because of your improved credit rating. You will also need to borrow less in the first place, because of your savings.