Used Car Loan- Where to Go?

[juan ruiz]

I won't get into the fine details but lets say for someone with Bad Credit? what are the options out there? My friend has been rejected from 4 banks due to Excessive Financial Commitments, however today he was offered a loan from a local Toyota dealer so we are thinking that there most be a way out there to get the funds to purchase a car that is for sale from a private party, loan amount needed $38.500.

Any suggestions?

[craigster59]

Ally (GM credit)?

[Zeke]

There is always a loan available. Look at the interest, it will be over 20%. I would tell your friend to NOT buy a car that costs 38K with bad credit. More like 3K.

[krystar]

tell em to buy a beater with cash

[nostatic]

Why does someone with bad credit need a $38k car?

[sc_rufctr]

Originally Posted by krystar

tell em to buy a beater with cash

+1 and then spend 12 months of what would have been repayments had he or she got the loan on fixing it up.

I know this doesn't help much but there's a reason this person got into trouble in the first place.

[gprsh924]

Why does someone with bad credit need a $38k car?

This

[Christien]

Originally Posted by nostatic

Why does someone with bad credit need a $38k car?

Because his co-worker/neighbour/brother-in-law/guy on TV has one.

I've written these loans for years, and the vast majority of them are sub-15k cars, maybe under 10k. Anything over 20k requires a minimum 20% down payment. A 38k car would require 10k down. Interest rates start at 26 and go up to 36. And no, I'm not trying to pick up a deal, because we can't finance anyone in the US. Just offering the perspective from the other side of the desk.

[stomachmonkey]

Juan says Bad Credit but based on the reason, "Excessive Financial Commitments", it sounds more like the friend is over extended which to me is worse.

My sister had some credit issues resulting from Med School, she was not a dead beat, just racked up a lot of debt getting her education.

She bought a new car, a Neon, cheapest thing she could get with a warranty and naturally had a ridiculous 30% interest rate but she sucked it up as a cost of doing business to get her credit rating back on track.

$38,500 buys a lot of new car. $38,500 on a used car? Does not sound like we are talking basic transportation here, sounds like a status symbol. I'd love to hear the reason this person NEEDS to spend that kind of coin on a used car.

[GH85Carrera]

So to buy the car he wants he must have 10 grand down. For ten grand you can buy a very nice reliable car and have no payments at all, and still put several grand to put in the bank. With no monthly payment you can save money fast, and pay to fix any problems that might arise with a cheaper car.

I guess that is why I drive cars that are 25 & 26 years old. No car payment this millennium for me.

To answerer the OP, don't go anywhere to make that loan, it is crazy. Buy something cheaper, much cheaper.

[red-beard]

In 2000, just before he got married, one of my cow-orkers bought a used Ferrari for about $38K, with about 5K down. The loan payment would have bought them a nice condo.

[john70t]

Originally Posted by nostatic

Why does someone with bad credit need a $38k car?

+2
Give him a fishing pole and instructions instead.

The unshackeling from debt will help him better long term. With any loan, you'll end up paying 2-4X the original price.

[kaisen]

Originally Posted by john70t

With any loan, you'll end up paying 2-4X the original price.

Problems with simple math again

[Christien]

Yeah, even at 29% you're still not going to double the price of the car, unless you finance for 6 or 7 years.

[gprsh924]

Originally Posted by john70t

With any loan, you'll end up paying 2-4X the original price.

Patently False

[john70t]

You are correct. My apologies. I exagerated.
I was thinking of real estate.

On a $100,000 loan, 30 year fixed loan, at 5% interest, the total payments would be: $193,255.20
($536.82/month x 360 months).

On a $100,000 loan, 30 year fixed, at 10% interest, the total payments would be: $315,925.20
($877.57/month x 360 months)

What I should have said was: The loanee would paying two to three times the original price.
The rest of the payments would go into Goldman Sak's executive bonuses.

"Patently false"? Unless you are trying to deceive people, try a mortgage calculator for yourself.
They are free online.

[UconnTim97]

Does your friend belong to a work credit union? They are usually better with regards to interest rates.

[Christien]

Originally Posted by john70t

Y
What I should have said was: The loanee would paying two to three times the original price.
The rest of the payments would go into Goldman Sak's executive bonuses.

"Patently false"? Unless you are trying to deceive people, try a mortgage calculator for yourself.
They are free online.

No, you really won't pay 2-3x the original cost. Check an amortization calculator. Amortize 10k over 48 months at 20%. Total interest paid is $4600. Even at 36%, you're only coming close to the price of the car in interest ($9000).

[john70t]

Thank you Christien.
I looked at a 30 year loan, instead of a 4 year.

Interest does make a difference over time when living on credit.

[Christien]

Absolutely. I had to accept that, even at 3.5-4%, we'll pay for our home twice. I'm ok with that. A car? No way.