First the cliffs: Whats the best way to get some sort of “loan” for about $2000 to facilitate downgrading to a cheaper car because $$ is tight?
Full text:
As I’m getting further into the real world, I’m learning more about what’s a good idea financially and what isn’t. Having financed my used Jetta for 6 years to keep the payments low gets put under the “bad idea” category. So I’m making ends meet, making my monthly payments, but there’s nothing left so I got no cash. In the process of correcting this, I want to downgrade from my Jetta.
A buddy of mine has a '92 G20 that doesn’t seem to have much wrong with it and even has lower miles than my Jetta does. (90k vs 86k.) I could probably get it for dirt cheap. The problem is I would need a short term loan for around $2000 to cover what I don’t already have for the cost of the car and a couple of known immediate repairs. I’m confident that I could sell my Jetta for what’s left on the loan.
I think it makes sense, and I’m not just justifying what I want to do with logic. Even though it’s older, it’d probably be at least if not more reliable than my Jetta. Fuel cost would be a bit lower. I assume insurance would be lower. I could have it paid off in under a year. Any holes in my logic?
So what’s the best way of orchestrating this little Enron scandal? Obviously I’d have a better chance at finding Bucky than finding a car loan for a 14 year old car. What’s a “personal loan?” Maybe try to find a credit card with a low or 0% introductory rate on cash advances? Has anyone heard of such a thing?
I own a home. The last I checked, my credit rating was good but that was a year ago and I’m not sure what it is now. I should probably cough up the 15 bucks to check that everything’s in order on my credit report. If possible, maybe I should get a personal loan for $11,000 to cover the downgrade and pay off my Jetta loan so that I can sell the Jetta without having to deal with a lean on the title. Then immediately throw the money from the Jetta sale at the new loan.
Can you use a home equity loan for things other than improving your home?
So, now that all you intarweb strangers know way too much about my personal finances, who’s got some good advice?
You can take a home equity loan for anything, in fact most of the time they advertise them as a way of paying off other higher interest debt. The rates should be better than a personal loan, but not always. Check with your bank, and your mortgage company if there are different, and see what they have to offer.
I know I just got an offer in the mail from Capital One for a personal loan, up to 30k @ 6.99% for 60 months. That’s better than anyone’s used car finance rates right now so I held on to the offer since I’m shopping for a car right now. That may be an existing customer offer though since I have both a Capital One credit card and a Capital One auto loan.
How much do you owe on the Jetta (guess around 9 since you said 11 would pay it off + buy the 2k car). Do you owe more or less than it’s worth? If more you’ll need to factor that in to how much you borrow.
Hopefully you owe less that or at least equal what the Jetta is worth. Then I would suggest just selling it outright and taking a small loan (personal, home etc… what ever has the best rate) and buying a replacement.
If you owe more you may be better looking for a cheaper car from a dealer and letting them juggle the funds so you walk out the door with a loan only for the price of the new car + the difference in the jetta’s value and what you owed.
The low interest credit card thing has dangers.
That is unsecured debt, and it is much harder on your credit report than secured debt.
Those super low rates usually have small print. One of the big ones is if you are so much as a day late the rate may jump up to some percent + prime, which would be 20+ %.
The rules have changed about minimum payments. Make sure to find out how the calculate the minimum payment so you don’t find yourself stuck paying more each month than you do now.
word… if u own a home, as long as it’s half way decent, try for the home equity loan. if not it shouldnt be an issue for u to get a personal loan, at least not for a few thousand.
One more thing. If you do take a loan out to pay off the Jetta and buy another car, make sure the terms on that loan allow you to pay on principle at any time, as well as pay the loan off early with no penalty. Otherwise when you sell the Jetta and go to put that money toward the loan you may find yourself in a new jam.
In before walter-the-self-proclaimed-financial-expert…
Not sure how you’d go about doing this, but when I bought my first car, I took out a five year loan, but paid it off in less than four. When I did this, they actually sent me back a couple of hundred dollars because they couldn’t charge me the extra year’s interest. Most loans don’t work that way, but given a choice, I’d look for one that does, that way if you have extra money at some point you can get ahead and save some of the interest money.
ive only skimmed the other posts so idk if this has been said already. usually when you take out a home equity loan, you get x.xx% interest which is usually cheaper than any other type of loan. when you initially start the loan, the only payment you have to make on the loan is the interest, you dont have to pay on the principle. basically, if you take out $10,000, the only payment you HAVE to make is the monthly interest on $10,000, and anything else you send them goes to principle. the way that works is your interest rate is variable and can change month to month, either up or down. you have the option to ‘‘lock in’’ your interest rate at any time, and it usually ‘‘costs’’ you .5-1%. when you lock in your interest rate is when your real payment term begins.
example:
you take out $10k @ 4%. for the first 6mo you only pay the interest on the loan. on the 7th month the interest rate goes up to 5%. you decide in the 7th month to lock in your interest rate so it doesnt go up any more. the ‘‘cost’’ of doing so is 1%, so your interest rate is now 6% and this is when you start your 60 month payment term.
Wanna know how you know I’m gay? Because we both made questionable financial decisions, but yours left you with a turbo IS300 and mine left me with a pretty red Jetta. :banghead:
His frame was rotting, so for now I’ll keep the Jetta. I’m interviewing right now at 2 different places that would put me in a better place financially anyhow.