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Discussion Starter #1
Not sure if this is the right spot to post this but I'd love some feedback. I'm new to this and really stressed out.

This last year hubby and I had a financial meltdown for a variety of reasons and now have a ton of debt, are paycheck to paycheck, wiped out our saving, etc. We have now come up with a plan and have made several steps to repair this situation and have a plan/budget to follow going forward.

However we are now in a situation were hubby needs to buy a car asap for work and I have no idea what to do. Assuming we can get approved do we buy and make larger payments longer on a new car purchase, do we lease for a short term while we dig out of this mess at a low monthly rate and save up for a smarter car purchase in a year or two?

**fyi buying a junker is not an option for him
 

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Discussion Starter #3
Thanks for your responses!

I think a used car might be an option (not really sure) I just meant he needs a nice car not a junky one and low or no miles, as it is for business. I am very anxious about this whole thing because we don't know much about car buying (until recently we spent most of our adult live in NYC aka public transportation) and he had a company car. We are in a lot of debt (another reason I am anxious about this) and I'm worried about buying anything as it seems a big commitment where leasing seemed "safer". So we went to go lease a used car which I thought would be the cheapest monthly and the lowest short term risk, only to find out there is no such thing as a leased used car. Oops.

For buying whether new or used we would not be able to pay off any new car debt for awhile (I'm guessing at least 1 1/2 years to get out of our current credit card debt) beside monthly payment over a few years. I think we may look at some used cars but my understanding is cars aren't a good investment to begin with so buying a older car with miles on it with no warranties incentives etc wouldn't be as smart as buying new and not having to worry about maintenance for the next year or two while we focus on our credit card debt. Also, part of our plan to get out of our mess was for him to get a new job, which he did, thus having to turn in the company car and needing a new one asap. I was leaning towards a short term lease because I think it will be awhile until he really know what he needs from this car as far as how the job goes, ie as of now he's not sure if he needs a SUV or sedan or what his traveling will be like and it may be awhile until that is all figured out but we need a car now and can't really wait it out much longer.
 

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New2debt I would buy a used car with not too much mileage on it. I don't know how it is in the USA, but inhere if you buy a used car from a certified dealer they can give you a guarantee. This would make any problems covered by the guarantee to be fixed by the dealer and might give you a bit more breathing space. I know a new car can seem tempting, however if you would buy a used car that is even 1 year old it would have dropped a lot of its value. The repairs on a car seem better to me than that drop of value, because the odds are pretty good that they will be less than the drop. Another thing that might be an idea to give you some more time could you borrow/rent a car cheaply somewhere or do you need a car that looks 'good' for your DHs work? I am sorry I can't just give you the answers as some of the other villagers might, but I hope I was at least able to help you a little.
 

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Used cars don't have to be Junkers.
The loss of thousands of dollars driving off the lot negates the potential repair.
But if you buy a 1-2 year old previously leased car you're still getting a fairly new car.

Leasing is a bad option. Period. Leasing doesn't mean you don't have debt. You owe that lease for 2 years. But you don't own a car.

I don't know your debt ratio but I would be very leery of adding on more debt. But I understand the need for a car. Get a car you can afford. That's all I can suggest. Debt should not exceed 30 percent of your take home. And to me, that's pushing it. But that's me.
Let us know what you decide. It sounds imminent.
 

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Being pressured for time never results in a frugal move.

There is no "short term lease" deal that is a good deal. You'll pay a lot for that convenience.

You don't know a lot about cars so a newer vehicle is the better option for you. You have to reconcile yourself to the fact that you will always pay through the nose for a car because you don't have skills in selecting them or maintaining them. When it comes to a job, your husband has to take this expense into account. The cost of buying and replacing a car will come directly off your bottom line every single month.

All that said, I have to ask ... what happens if you can't get financing for a car loan? What if you can't even qualify for a lease? What would you do?
 

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I'd a buy a few years old nice car. Up until moving to Europe, I drove a couple of nice Audis that I bought a few years old, with low miles and a warranty for about 1/2 of what they cost new.

I bought my first new car this past June, but only because I live in Denmark and didn't want the hassle of dealing with car repairs in a foreign country where I'm not good in the local language. In that case, it's money well spent, but if I were to move back to an English speaking country, I'd buy used again for sure.

I'm not a fan of leasing.... cars or houses. Leasing is a monthly expense and at the end you're left with nothing, so I see leasing as worse than debt, except in a very narrow set of circumstances.
 

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Leasing does not make sense. Once the lease is done and you've spent all that money, you have nothing.

If you buy new, you lose big the minute you drive off the lot. Buying a new car at zero interest means you will most likely pay a premium price for the car, because that zero interest loan is not going to actually be free.

Check into car auctions. Your dealer should be able to tell you about them. We ordered a rental return from our local dealer and told him what we wanted, what options, what price, etc, and also told him what we would not accept. We had the option to turn down the vehicle if it arrived and turned out to be unacceptable for any reason, but we loved it. They found us exactly what we wanted in Denver, then flew a guy down there to get it. We ended up getting a 2005 model in 2005, for about half what a new one would have cost us. We did not need to spend $15,000 extra for the privilege of driving that first 35,000 miles, so we took the money we saved and our new van and went on several camping vacations to various states. As far as the warranty goes, ours still was under warranty when we got it, plus the dealership covered it for a short time. We have had no major problems with it yet, in spite of using it for a tow vehicle with our pop up camper for thousands of miles.

Be sure to ask for the Carfax report when you're shopping for cars. If they can't or won't provide it, find a different dealer immediately. They should offer it without you even asking.

Also stay away from any cars with an east coast history. The damaged Sandy cars are starting to hit the market now.
 

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Is there anyone you know who is good with vehicles? They can help you pick a good used vehicle. Both our vehicles are used, not very old though. But the previous owners did all the upgrades, bought all the extras. You will get more vehicle for your money buying a good used vehicle. But you do have to be at least a little knowledgable about what to look for/what to avoid.

Please don't lease. It's very rarely a good financial idea.
 

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How many cars do you currently own? If you stay at home could you live with only one car for a while or possibly share a car? Not sure of your current car situation just putting it out there.
 

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Discussion Starter #12
Wow, what a great forum, so many replies! Thanks so much!

I think we will look into a used car that's a year or two old, I do see your point. One reason I was leery of buying a new car was the value lost immediately and I'm nervous about taking on an extra debt when we have so much now and the budget is so tight. One reason we looked at leasing is we saw it as short term renting no long term debt or commitment.

For those who commented on leasing ending up with nothing in two years, I know this may sound weird but that's kind of why its appealing to me. In two years a lot can change, we may be out of debt and have a better idea of what we can afford. His company may (like their competitors) offer a car. My car will be paid off and we could sell it or he could take it instead. He may buy a sedan now and realize a pick-up would have been more appropriate for the work. You get the idea, there is a lot of uncertainty which is not a good way to make a decision.

CookieLee - Yes, we did discuss this with the new employer and they have been generally toying with the idea of supplying vehicles to employees. They are supplying a gas card with no limit. They are giving a car allowance of $500 a month (minus taxes). They will not pay for maintenance (thus where the new car/lease idea came from) or tickets or repairs.

Nadders - My father-inlaw worked for GM for 30+ years and helped give advise when we bought my car. However he is a big supporter of leasing (although I bought my suv) and I know he would never ever support getting a used car. With our GM discount I'm not sure there would be much of a price difference anyway but I'm willing to look into it.

Shoji - We have another car but we both need a car for work at the moment I am working from home most days and when I'm not he is renting a car which is costing a fortune, I need to get back to fulltime work for our budget but can't do it without a car. FYI we both travel for work, (not office jobs) so we can't share a car.

Okay, general question. My thought is our credit debt is out of control and our number one focus should be getting the best car at the lowest monthly payment so we can pay down debt even if its leasing, is that not true? Should the "good financial" investment of the car be priority, ie buying a car with higher payment so it takes longer to pay down credit car debt but we'd own the car in a few years?
 

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For those who commented on leasing ending up with nothing in two years, I know this may sound weird but that's kind of why its appealing to me. In two years a lot can change, we may be out of debt and have a better idea of what we can afford. His company may (like their competitors) offer a car. My car will be paid off and we could sell it or he could take it instead. He may buy a sedan now and realize a pick-up would have been more appropriate for the work. You get the idea, there is a lot of uncertainty which is not a good way to make a decision.
Sorry, that still doesn't make any sense at all. :shake: Why would you want to end a 2 year payment with nothing, when you could have a 2 year payment with a car to trade in?
 
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Okay, you're getting a $500 a month car allowance. Here is the solution:

Buy a car that costs less than $20,000 (there are several on the market - even new). Your payments will be around $300 a month. If that car isn't suitable for his job, he drives your SUV and you drive the cheap car. Sink all of the $500 into paying off both car loans and budget separately for a regular car maintenance account.

If I remember correctly (you've posted before, right?), you also need a car for work so living on one car isn't feasible for you. Personally, buying a one or two year old car will probably be just as expensive as buying a new car because the used car market is very tight right now. The exception is if, through your GM connections, you can find a great used car at a great price. If so, that is the way to go.

DO NOT LEASE!

Alternately, you can make do the way you are now and sock away that $500 a month until you have $2000 to $3000 in the bank. Combined with any other money you can scrape together you would have enough to buy a really inexpensive car in no time at all. (You've already been saving that money, right?) Again, if he really needs a nice car, then he drives your SUV and you drive the cheap car. As you continue to sock away that $500 (less the cost of maintenance, of course) you can upgrade to a slightly nicer cheap car.

You already have one car payment and are deep in debt, barely making your payments. I wouldn't be looking to take on a second car payment now.
 

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If you decide to purchase a used car I would definately bring it up with your father in law explaining that you and your husband are trying to pay down debt and have x amount to purchase a car and leasing is NOT an option. Just stick to what you and your husband decide and hopefully your father in law will understand. Personally I would not lease a car in your current financial situation.
 

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Keep in mind leases have "loopholes" or they use to. A big one is a limit on the miles you can drive. If you're using it for work travel, this could cause a problem at the end of your lease. They use to charge for each additional mile over the agreement. This detail may be hiding in the fine print.

Good luck find a car/suv that works best of your situation.
 

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Discussion Starter #17
Buy a car that costs less than $20,000 (there are several on the market - even new). Your payments will be around $300 a month. If that car isn't suitable for his job, he drives your SUV and you drive the cheap car. Sink all of the $500 into paying off both car loans and budget separately for a regular car maintenance account.
This is kind of what I've been thinking. Although two questions;
1)Any reason you suggest using the difference towards the other car payment and not toward the credit card debt which was my plan? There won't be much difference left any way after taxes, insurance, tolls etc but just wondering.
2)We saw a car that fit your $300 scenario to buy but also saw a lease for $199 which would mean more money left every month toward credit card debt which I had been thinking should be priority over the car, but maybe not?

And yes the mileage issue is a big concern I have with leasing as he doesn't know how much/far he will be driving.

I guess I'm just focused on getting the lowest monthly payment regardless because of the credit card debt, I just hate adding to our debt and feel really forced into making this big rushed decision. I do totally understand everybody's comments about leasing in general and that is one reason I bought my car and have never leased but now our situation has changed. This is new situation for me and my gut just says keep expenses as low as possible until the credit card debt is gone.

Thanks again I do appreciate all the feedback!
 

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Okay. Hugs! It's a tough one to make. So many points. So many ifs, and, buts.
I can see your point about keeping upfront costs super low.
Let us know what you decided.
 

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Why I'd pay off the car(s) first ...

If the absolutely worst happens, a bankruptcy could erase your CC debt. However, if the worst happens they WILL take your car(s) and house. They'll take your car(s) even if you only owe one more payment. As you pointed out, if you don't have a car, then you have no way to get to work or search for work.

You can always negotiate the final pay-off on a credit card. You can't negotiate the final pay-off on a car loan (unless the interest rate is exceptionally high). You can negotiate to lower the interest rate on a credit card or to freeze the account and give yourself a low, fixed payment. Once you sign up for a loan like an auto loan, it is unlikely to change without re-financing.

Frst pay off the loans that are least flexible and most risky: Student loan debt would be the first thing I'd pay off since you owe those no matter what you do. I'd then pay off a mortgage, then auto loan. Medical debt and money owed to contractors / service people come next because usually if you availed yourself of their services once, you'll want to use them again. What is the worst the cc companies can do to you? Sue you? Sure, let them. You were going to pay them anyway. No, this isn't the Dave Ramsey plan but it makes a lot of sense.

Look, I prefer you don't get a second auto loan FOR ANY REASON. I'm serious. I think it is a huge mistake to recognize that you're in a huge amount of debt then willingly decide to take on more. I understand why you want to but I think it is a mistake. Dave would tell you to sell the SUV and buy one or two junker cars. He'd berate you to bite the bullet. I know why you don't want to. You haven't gone through the classes yet. You still think you can borrow your way out of debt. You think if you just get all your payments low enough it is all going to be okay. I know that isn't how it really works but I also know human nature. I'm not judging. I'm just saying I have been where you are now and I completely understand how tempting it is to borrow your way out of this little dilemma of how to get hubby a vehicle for his job without you having to give up the pleasure and convenience of you driving the SUV you love.
 

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Discussion Starter #20
Thanks everyone lots of good info on here and very interesting to here different points of view. We have more cars to look at this coming weekend and I will add used cars to the list and rethink the whole lease thing!

CookieLee - I appreciate the explanations but I think your last paragraph is really uncalled for and not helpful. I never suggested borrowing my way out of debt, we are not trying to get a loan or new credit card to pay off an old one, this thread is about a car. Buying a "junker" as you put it is not an option for his job, and his company is not giving him $500 a month to buy a junker or to pay off our credit card debt. This new job is a great salary and will help with our finances tremendously and a nice car is part of the job. Your comment about not paying the credit cards and letting them sue is not am attitude I'm comfortable with. It may work for you but I feel that we spent that money and we need to pay it back period. We had a rough year and some major life disasters but my perspective is first we need to get out of it ourselves no bankruptcies, no lawsuits, no borrowing from family, no cashing in 401k etc I think if we increase our salary (which we are both doing) and keep our monthly payments low, we can use the extra to pay down our debt and refill our savings over the next year and a half. I don't see that as "borrowing to pay our way out" as you say. Your right that I haven't done DR classes yet and he may have a different approach but we are just starting on this path and negative comments and accusations don't help.
 
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