I have an employee who was recently shopping for a late model used car. She and her fiance spent about two weeks looking. This was due more to the fact that her credit was questionable and she needed to find someone willing to take a chance on her. Her credit is more limited than bad, she has only one loan on it and that was paid over 5 years ago. Hubby-to-be insisted she get the loan on her own. He makes 40k a year while she makes about 15k a year. Did I mention the fiance thinks he knows everything about everything? Remember that.
Needless to say, they negotiate a few deals before she finds a car they feel is worth it. Her initial budget was $150 a month, length of loan wasn't important as long as she got the payment amount right. This car was $5999, they were to pay $2k down, leaving $3999 balance for the loan.
Now, the fiance has the money for the car in the bank. My suggestion was to have him give her the money, let her open an account at a credit union and get a secured loan against the balance. She would be able to choose the length of her loan to tailor her payment as she needs. As she paid her payments, that amount would be released and she could give that back to him. Not to mention she would have a way lower interest rate and own the car outright, enabling her to carry lower insurance if she so chose. Presently, the secured loan would be at around 3%. The fiance told me he knew what he was doing and doing it my way would only save her a couple hundred dollars. Whatever, saving anything is a good enough reason for me.
She now is the proud owner of a nice used car with payments almost twice what she originally had the budget for. The 3995 loan will pay out at 10,300 over 40 months. My way would have saved her close to $6000.
I understand a car loan may weigh more heavily on her credit than a secured loan, but for the $6000 price tag, I'd take the secured one. Not to mention it fits her budget a lot better. Then he comes to me and they have the nerve to ask for a raise to make sure she can pay for the car. Sure, no problem... NOT!
Sometimes I wonder where common sense went. Why is pride such a high price to pay for some people?
Needless to say, they negotiate a few deals before she finds a car they feel is worth it. Her initial budget was $150 a month, length of loan wasn't important as long as she got the payment amount right. This car was $5999, they were to pay $2k down, leaving $3999 balance for the loan.
Now, the fiance has the money for the car in the bank. My suggestion was to have him give her the money, let her open an account at a credit union and get a secured loan against the balance. She would be able to choose the length of her loan to tailor her payment as she needs. As she paid her payments, that amount would be released and she could give that back to him. Not to mention she would have a way lower interest rate and own the car outright, enabling her to carry lower insurance if she so chose. Presently, the secured loan would be at around 3%. The fiance told me he knew what he was doing and doing it my way would only save her a couple hundred dollars. Whatever, saving anything is a good enough reason for me.
She now is the proud owner of a nice used car with payments almost twice what she originally had the budget for. The 3995 loan will pay out at 10,300 over 40 months. My way would have saved her close to $6000.
I understand a car loan may weigh more heavily on her credit than a secured loan, but for the $6000 price tag, I'd take the secured one. Not to mention it fits her budget a lot better. Then he comes to me and they have the nerve to ask for a raise to make sure she can pay for the car. Sure, no problem... NOT!
Sometimes I wonder where common sense went. Why is pride such a high price to pay for some people?
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