4

I really just need opinions. I want to put a $1,500 down payment on a $10,000 used car and able to pay the monthly payment. Since I’m a minor and will be under my mom's name and she has a bad credit score, do you think I would still be able to get the car?

  • 8
    Depends on how bad her credit is, but loans suck, especially for cars, better to save up more and buy something inexpensive. – Hart CO Nov 11 '17 at 18:12
11

do you think i would still be able to get the car?

Sure. But at a usuriously high interest rate. Thus, don't do it even if the car dealership says yes.

Why? Because such a high rate will put you in the hole for years (probably you'll still be in debt after the car has died).

i want to put a $1,500 down payment on a $10,000 used car

If you really want an opinion... you don't have the finances to buy a $10K car. Buy a $5K car.

  • 15
    I'm not generally against car loans like a lot of people around here, but IMO at that point in life, just get a $1500 car and pay cash. – Kevin Nov 11 '17 at 18:26
  • 3
    @Bob if she has $100K in the bank then why is her son worried about her bad credit? (Why does she even have bad credit???) – RonJohn Nov 12 '17 at 1:43
  • 3
    Edit needed: Buy a $1500 car. – Pete B. Nov 13 '17 at 15:46
  • 2
    +1 for the note not to buy a car you can't afford. Big problem here in the US. – schizoid04 Nov 19 '17 at 5:34
  • 1
    @Pete B.: IMHO it should be "buy a $1000 car", because you'll probably need at least $500 to cover registration & insurance. – jamesqf Nov 19 '17 at 18:47
5

Some others have commented on this a little bit so far, but I want to expand:

Don't buy a car you can't afford, especially not at your age.

A car loan costs you a lot of money in the long term - You have to pay for full coverage insurance (compared to liability for an inexpensive, 'disposable' car), you may be charged a hefty fee just for originating the loan, interest, etc.

In addition, a car you buy that's relatively new (You may have trouble getting a loan on an older car, so i'm assuming it's fairly new) will depreciate over time. This is much more significant for cars in the price range of 10,000+ , but is fairly insignificant for cars that have depreciated to $2-4k, as they've got hardly any value to lose after that point.

Yet, if you purchase a car for about $2000-4000 (You should be able to find a ~2005 or so car for this price range easily), you don't have to worry about making payments, full-coverage insurance costs, possible re-possession if you default, etc.

You also have the peace of mind, that if someone dents your car, it's not the end of the world because the car's not worth that much.

I currently drive a '07 PT Cruiser that I inherited from an aunt 3-4 years ago. It's got a blue-book value of about $2,000 , but you can find them all over the place with reasonable miles and price. It's a cheap car, and doesn't have ANY luxuries like ABS brakes or cruise control or fuel efficiency tracking, but I don't bother replacing it (and won't until it dies off) because it's really, really cheap compared to me buying a newer car. Every month I go without spending money on a new car is another couple hundred bucks I can spend now on something else that I want.

To summarize, it will save you a lot of money in the long run if you buy something cheap early on and wait until you're in a better financial situation to purchase something nicer.

The value you'll get out of a cheap car can be hard to realize until you've had one for some time.

If you do purchase a car out-right, though, you have the freedom of not having to worry about affording the payment: You can quit a job, and as long as you don't have a ton of other bills to pay, which I'm sure you don't at your age, you don't have to worry about continuing to work immediately to pay for your car.

It's easy to be 'responsible' when you've purchased it outright, compared to the responsibility of taking on a loan.

However, to answer your question, technically, yes, your mom's bad credit could prevent you from co-signing a loan for a car.

Today, though, in the US, sub-prime lending is at an all-time high, and predatory auto loans are being given to people with ridiculously high interest rates, even if the people have terrible credit histories.

I think it's very possible that your mother could find someone that would give her a loan, with her bad credit, it would just take some time to find that lender, and the terms of the loan would be absolutely horrid if she really had a bad credit score (Say below 650 - 700).

  • 3
    "Every month I go without spending money on a new car is another couple hundred bucks I can spend now on something else that I want." Or saving for car repairs, and the eventual replacement. – RonJohn Nov 19 '17 at 8:18
  • 1
    @RonJohn: Or you could invest the money, and eventually become financially independent. – jamesqf Nov 19 '17 at 18:53
  • Both good points – schizoid04 Nov 19 '17 at 19:04
1

Can't you wait a bit? I arrived in US some time ago, got a prepaid credit card and spent just a little bit every month (around $100) and always paid the bill on time. In six months the bank refunded the deposit and gave me a limit of $1000 (I'm sure I can ask more now). In 12 months from nothing I got a credit score of 780. At same time I got only $3000 to buy a car and I bought a $3000 car that I will drive until I saved enough for a Tesla (which I won't finance).

  • His issue seems to be that he's a minor - He won't be able to apply for credit on his own, and thus would be required to have his mother apply with him for the loan, which poses an issue because his mother does not have a good credit score. You're correct - It's easy to build your score to 750-780 without costing you much. However, if you have negative marks on your report, it takes time to recover (such as for his mom). – schizoid04 Nov 19 '17 at 5:36
  • In this case, no matter how you slice it, cash is king. I'm generally anti-debt to begin with, but in this case he's a minor so unable to get credit, so the debt would all be (legally) his mother's. The high interest rates on car loans in general, especially with a bad credit history are a red flag. The general principle of wealth building is "never borrow money for a depreciating asset" is an unnecessary nail in the coffin of the idea. – pojo-guy Nov 20 '17 at 4:43
0

Yes, if you are applying for the loan under your mom's name it would drag you down. Since she doesn't have good credit, you'd have a higher interest rate and you'll end up paying way more than you should for that $10,000 car.

Since you're so young and have some cash for a down payment, I'd suggest looking for a cheaper car, around $5K or under. When I was 16, I bought a $5,000 2003 Buick that was in great shape from a family friend, which meant no official loan. Was it the most attractive car? No, not by any means. But I paid my monthly car payments to the seller personally. My mom had, and still has, bad credit, so I couldn't have gotten a loan and I didn't have enough cash to cover an entire purchase.

Three months ago, at age 22, I finally got a used car I love, financed through a loan I got all on my own.

Honestly, ask around with family and friends to see if anyone you know is selling an older car in good condition. I know a few friends my age who purchased their cars from friends of family, or family members who were upgrading and needed to get rid of their car.

If that option doesn't work, look into financing a cheaper used car (~$5K). You might still be bogged down by your mom's bad credit, but at least you can pay this one off faster than a $10K loan.

Once you're older and can use your own credit score and money, go for the more expensive car.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.