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So here is my situation. I have a car that is very dangerous to drive at this point. Like I am seriously worried that either I or the car won't make it through the upcoming winter months. Now, I would love to just...get a new one, but I can't, and here's why. The only thing on my credit report are about $26,000 in school loans, which I do not start paying back until January 2011 because I am waiting for them to get consolidated. I have been disapproved for everything from a high interest rate car loan, to a department store credit card. I cannot even get anything at this point to start building my credit, nor do I think there would even be enough time for that to take effect even if I could.

I have about $3,300 left on my current cars loan. I do have enough to pay it off saved up however, even if I did pay it off, I can't buy another car in cash and I cannot sell my car and get a new one because I won't be able to get a loan. I don't have enough money to pay my current car off and pay for a new one in cash either.

I earn about $1,200 a month and that is AFTER all my monthly requirements (rent, car payments, bills, food, etc.) so that gives you guys a feel for where I am at financially, and I have about $4,000 in savings, which I really didn't want to tap into but I would if I had to.

Do any of you guys have any idea for how I can get through this? The main goal I would have is to get a new car within the next month. Is that possible? I would love to have an auto loan so I can use it to start building my credit for the future, however getting a new car in general without one would still be okay because I am mainly just worried about my safety.

Please help!

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    Do you live a city with zipcar.com?
    – MrChrister
    Commented Nov 21, 2010 at 6:49
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    You're leaving out some material facts. Either you have a horrific payment or check bouncing history, you've cosigned a loan for someone who took advantage of you, or have an identity theft issue. Get your credit score and figure out what the issue is.
    – duffbeer703
    Commented Nov 21, 2010 at 20:23
  • How much will your school loan cost per month?
    – GUI Junkie
    Commented Nov 22, 2010 at 8:36
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    @djc Apparently, it would cost him around $4k to make the repairs. Which makes me wonder if the car was driven through a swamp or something.
    – George Marian
    Commented Nov 22, 2010 at 23:14
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    You say you have no credit history except student loans, but you have a car loan with $3300 left. Something isn't adding up. And you shouldn't be getting declined for loans, especially if you have $1200 in disposable income. What aren't you telling us?
    – myron-semack
    Commented May 6, 2011 at 16:03

7 Answers 7

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I'm not sure about where you live, but the 2 cars I've had I got them off Craigslist for $500 and $800 respectively (had an accident with the 1st one that was not due to malfunction).

If you're not concerned with how it looks you can find really cheap cars, but you'll need to cut out the middleman and find someone who's selling directly. Just bring someone who knows a good amount about cars (if you don't yourself) to make sure all the vitals are okay.

Also is public transport an option in your area?

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From the sounds of it, your car is in particular dire straits. I would be shocked if you cannot find a $3000+ car that has working brakes. Sure it would be another clunker, but you can trade crappy seats and no heater for brakes. Then you can own two cars while you offload the first.

The way you make it sound, this is the emergency that you have done well by yourself to save for.

With $1200 extra, you have your entire savings back (plus some) in four months. So if you are so very worried about the car, get it replaced (or fixed) and worry about your credit later.

What good is credit if you are dead?

Also, as far as buying a car have you visited a credit union? Take to someone in person and explain your desire to build credit. The credit union is there to help.

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  • Well I also don't want to pay for two cars at once...
    – Scott
    Commented Nov 21, 2010 at 15:35
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    No second loan, just buy a car off of craigslist. There is no reason to borrow money to buy a car. I bought a $4000 car that I drove to nearly three years. It was 12 years old but ran well.
    – MrChrister
    Commented Nov 21, 2010 at 22:27
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From the sound of it, your financial situation isn't dire. You have 1.200 usd per month freely available. Buy a decent second hand car for less than 4.000 usd you have saved up. Pay off your car loan and sell the other car ASAP. You should be able to sell your car to a car dealer if you buy another car. Even if it's second hand.

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I'll take a stab at it.

$1,200 per month is a fair bit after your necessities are met.

As far as school loans go, yours doesn't seem huge. What will your payment be?

You have some sort of emergency fund. That's good. Keep that in case something happens to the car.

As for your $1,200 per month discretionary, I'd pay just your minimum payment on your student loan when it comes up. Split the rest by accelerating your payments on your car loan, and putting the rest into savings.

When the car loan is paid off, you'll have more wiggle room to save for a more reliable car, and you can sell the scary one.

Update: The conversation continues in the comments.

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  • Appreciate your response. However, the main goal is to find out a way to get another car in a month before the winter weather comes into play because I don't think my car can safely make it through the winter.
    – Scott
    Commented Nov 21, 2010 at 5:43
  • Why is it that dangerous? Thing is I don't see how you have enough money now to get anything but another beater, unless you sell a lot of your stuff for 20 cents on the dollar. Next best thing is to take it to a mechanic to see what the big problems are. Have you done this?
    – mbhunter
    Commented Nov 21, 2010 at 5:53
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    Problems will be about $4k to fix, which is the exact amount I have in savings. Thing is, that's more then the amount the car is worth. It's worth about $1,500, topped off with the fact that I owe $3,300 on it. When the roads are wet, the car can barely break, and slips all over the road. I can't replace the tires without replacing the arms, which would cost over a thousand.
    – Scott
    Commented Nov 21, 2010 at 5:58
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    Right, that is dangerous. If you can find some ugly car for, say, $1,000 or less that isn't an accident waiting to happen, then you should be fine for a while. You're buying (relative) safety at this point. Also, what about public transportation or carpooling?
    – mbhunter
    Commented Nov 21, 2010 at 6:07
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    I'd upvote this, but it still suggests hanging with the car that can't stop. This car sounds like an emergency.
    – MrChrister
    Commented Nov 21, 2010 at 7:21
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$1,200 in the pocket AFTER expenses?! With all due respect, what are you complaining about?

Sell the car, even if it's just by having someone else take over the loan, buy a new one with the $4,000 you have, save for 4 months and you're right back at where you are now, only with a new car.

Where exactly is the problem?

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    Please don't belittle other users. Anyone can ask for advice, no matter what their income level.
    – Benjamin Chambers
    Commented Jan 10, 2011 at 23:43
  • Absolutely, positively no belittling intended. I'd say the same thing to my boss and my mother.
    – Teekin
    Commented Jan 11, 2011 at 23:18
  • Oh, and that was intended also for Scott, the poster. :) No belittling intended, mate.
    – Teekin
    Commented Jan 13, 2011 at 14:37
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Actually the answer is really easy - its about prioritization.

Priority 1: Don't die. Repair the damn car, even if it costs all your savings. Even if it costs $6k - put the rest on a credit card (you can pay off $2k in 2 months, remember).

Priority 2: Find out how the car got in that state. If you have $3300 left to pay on a car that is worth on $1500 then you were scammed by the seller or you trashed the car. If it was damaged in an accident take a solemn vow to insure anything you owe money on next time. Maybe the value will go up if you repair the brakes.

Priority 3: New car. You may find that once it is repaired the car will last for years. Assuming you don't trash it again. (If you told us how old it was that would be helpful). Use your $1200 a month to pay off the car debt, and minimum payments on your student loan, and build up a savings fund again. Drive the car until you both don't want to any more, AND you've built up enough savings to buy a new one with cash.

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    Spending $6K on a car worth $1K makes no sense. Better to just buy a used car for $6K.
    – sixtyfootersdude
    Commented Aug 7, 2015 at 20:17
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Please don't buy a new car. Don't take anymore loans. Buying loan to build credit is the worst idea in my humble opinion. You don't need good credit score if you don't need a loan, simple as that. Looks like you really need a car that is just safe to drive, just do that. Spend all your savings to get a second hand car. From your monthly left over 1200 you can easily get back that savings in 3 months. Keep saving.

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