My boyfriend bought his car brand new in 2003 - its a Mitsubishi Lancer. He's almost halfway through a 7 year finance deal on it but still owes about $12,000 at 12% APR. He has pretty bad credit.
Lately he has been thinking of leaving his full time job at a car dealership that he hates and working back at a job he really liked that paid less so he can go to school part-time and re-fi his car loan so he can afford it AND go to school. Part of him is also trying to find other options, like if it is possible to sell his car back to the dealership or something and get a cheaper vehicle. He wishes he could go back in time and never buy the car because $435 a month is a lot to spend!
What options does he have? He's open to any ideas as he isn't sure what he can do with his car. He owes more than he's paid so far, so he can't sell it outright as he won't get enough for it. Any help will be greatly appreciated!
2007-03-27 11:30:50 · 8 answers · asked by Miss Linda 3 in Business & Finance ➔ Credit
A few more details:
1) Asking parents is not an option. He's 26, not 16.... what kind of world do we live in? I encourage him to never ask his parents for anything - they've already helped him enough...
2) He won't be getting student loans. He can get financial aid without having to get loans.
3) A second job really is not an option for him. There isn't enough time in the day for him to work more than one job when he has over an hour commute to work and an hour back from his full-time job every day anyway...
2007-03-28 05:33:45 · update #1
Easy answer.
Your boyfriend already KNOWS he made a bad decision so he should avoid SWITCHING costs because he will get raped once again on TRADE-IN-VALUE and then on the purchase of a new vehicle (he will get a hella high interest rate on the new car).
Your man should stay put and pay off the existing car by getting two jobs BEFORE starting school and BEFORE quitting his higher-paying job.
He needs to FOCUS.
One thing at a time.
I know he doesn't like the idea of getting 2 jobs to pay off the loan but he needs to feel what it is like for regular folk to OWN something with no debt over it (even it is a depreciating asset).
Once he pays off the loan -- he should also continue that 2nd job just to get enough CUSHION money for his lower paying job.
Once he gets the cushion money for the lower-paying job -- THEN get the lower paying job and quit the car dealership and then start school part-time. Do not quit a job until you have a job. You will be surprised at the number of people who don't follow this edict!
He needs to stick it out at the car dealership UNTIL he pays off the car off IN FULL. This needs to be a goal from which he will not be moved.
2007-03-27 14:15:24 · answer #1 · answered by DaMan 5 · 1⤊ 0⤋
I have looked at his situation with what we do at my credit union. We look at the value of the vehicle. I looked up an 2003 mitsubishi lancer and the loan value is $5,825.00. Meaning that if he was to refinance with my credit union we could only get him up to that amount. With his credit being bad his rate would 13.25%. If he has long enough job time also, usually 6 months. I wouldn't recommend refinancing if you can avoid it. I would try and sell it individual and try to get as much as he can out of it. He will not get the full $12,000.00 which he would have to come up with the difference. If he trades it in for a cheaper car they will tack on the balance to the new loan. Look around and see what dealers might give him on a trade. Good luck!
2007-03-27 18:40:46 · answer #2 · answered by Jill J 3 · 0⤊ 0⤋
Bad credit is one of the worst problems to have... however there exists a solution.
I will hereby talk from my personal experience.
I did debt consolidation a couple of years ago, however If I had to do it again I would pay to some minor details,
if someone wants to get out of debt today it is pretty easy with a debt consolidation plan, however it may get a bit tricky at times, I suggest you get as much information as possible online on this first,
a good place to start in my humble opinion is astraight to the point ebook with question and answer I found :
http://umgarticles.atspace.com/debt-consolidation.htm
if it helps kindly remember me in your voting!.. cheers!
2007-03-30 10:28:17 · answer #3 · answered by gabriel jones 4 · 0⤊ 0⤋
I would begin by seeing what your credit score currently is and also pulling your credit reports. You can do this by going to www.annualcreditreport.com
The reports will be free if you have not pulled them in the last year but the score will cost around $10
Next, I would see what kind of interest rate you could get with the score you have, if it is not any better or even much better than you have now I would consider fixing your credit first and then doing a refi.
2007-03-27 18:41:51 · answer #4 · answered by Anonymous · 0⤊ 1⤋
He'd get more money for the car selling it as a private seller than selling it to a dealer. He's upside down in his loan, so it may be best for him to just keep the car. See if his parents could help him out or have him refinance so that he could stretch out the payments. Has he considered getting a second job to help him pay for the car?
Is he going to get student loans? That may be helpful for the short-term.
2007-03-27 18:36:26 · answer #5 · answered by Anonymous · 0⤊ 1⤋
Go to a bank and get a new loan at a lower rate. You could probably get 8 or 9%. That won't solve everything, but it's a start.
2007-03-27 18:36:23 · answer #6 · answered by Cardinal Rule 3 · 1⤊ 0⤋
So he bought this car at 12% over 7 years. Payments are $435 a month. By the time he paid it off he'd have paid over $35,000. Not a good choice. Yikes.
2007-03-27 18:44:57 · answer #7 · answered by SickofRipOffs 1 · 2⤊ 1⤋
why you want a bf w/lousy credit is beyond me.
2007-03-27 18:39:04 · answer #8 · answered by the_skipper_also 3 · 1⤊ 1⤋