Vehicle loan issue

[Ruthie5671]

I'm in a budgetary funk. My husband and I have pretty icky credit. Too many credit cards, I pay my mom's mortgage, medical bills, etc. We both work very hard, but it seems like every month we have to use credit cards just to make it thru the month.

We currently have one vehicle, a 2003 Honda Odyssey (we call him Harold). Harold has almost 178,000 miles on him. He is a good vehicle. We got him a tune up (his version of a spa day) at around 100,000 miles and we are diligent about regular maintenance. So while he may have a few issues here and there, it is still a good vehicle. The loan for Harold is through our local credit union. We have two more years of payments (bought the vehicle two years ago) and the value of the vehicle is far less that the amount of the loan.

Hubby and I have been kicking around the idea of trading in Harold for a vehicle that doesn't have quite so many miles on it. When we went to the credit union this morning, we were told that they would not approve us for a loan due to the significant amount of debt we have. So now hubby wants to run around to a bunch of other banks to see if we'll qualify or go through a dealership to see if we qualify. I think we should just wait and continue working on paying down our bills. Any thoughts?

 

[*pixie*dust*]

I'm in a budgetary funk. My husband and I have pretty icky credit. Too many credit cards, I pay my mom's mortgage, medical bills, etc. We both work very hard, but it seems like every month we have to use credit cards just to make it thru the month.

We currently have one vehicle, a 2003 Honda Odyssey (we call him Harold). Harold has almost 178,000 miles on him. He is a good vehicle. We got him a tune up (his version of a spa day) at around 100,000 miles and we are diligent about regular maintenance. So while he may have a few issues here and there, it is still a good vehicle. The loan for Harold is through our local credit union. We have two more years of payments (bought the vehicle two years ago) and the value of the vehicle is far less that the amount of the loan.

Hubby and I have been kicking around the idea of trading in Harold for a vehicle that doesn't have quite so many miles on it. When we went to the credit union this morning, we were told that they would not approve us for a loan due to the significant amount of debt we have. So now hubby wants to run around to a bunch of other banks to see if we'll qualify or go through a dealership to see if we qualify. I think we should just wait and continue working on paying down our bills. Any thoughts?

If you are "upside down" on your vehichle and have credit issues you will have a very hard time finding someone to finance you at anything near a decent rate. Credit unions usually have the most credit friendly policies and rates --so if your credit union is saying no, you wont have a lot of cost effective options. The good news is that most Honda made vehicles are tanks and last a LONG time with good care. I had a 1996 civic that had nearly 300,000 miles before it died. Do your best to keep Harold running and focus on paying down your loan. You will get there eventually -- its just not the right time yet.

 

[yoopermom]

My DM has an Odyssey same year/same mileage, and she's planning on driving it for another 100K. With your financial situation, I would plan on doing the same. Just keep up faithfully with the basic maintenance, and it should keep on running.

In the meanwhile, time for a meeting on what's owed, why, and what it would take to keep it all covered month to month. Sounds like Harold is the least of your worries.

Good luck!

Terri

 

[DOREEN1779]

Based on the age of your cars and that you owe at least 24 months of payements, I think you need to keep those cars until they have no life in them. When you are done paying them off, put that monthly payment aside for a reliable car when the time comes. Clean up your credit and try to get a lower finance rate. I drive a 11 year old car named Fred. While we can afford a new car, there are no major problems with Fred and financially makes no sense to upgrade. We bought Fred new and got 0 down with 0% financing with Ford. It worked out to $505.90. So now we bank that amount and receive a lower insurance rate because we do not need the $500.00 deductable that is required in NJ. If Harold does kick the bucket, depending on your yearly mileage, a lease may be a better option for you.

 

[LuLuO]

I think you are going to have a hard time getting into another car for an affordable payment. I'd drive it until it can't be driven any more. When your loan ends, take that amount and save it every month toward the purchase of another car so you don't need to take on another car payment.

 

[MSSANDRA]

Keep Harold. We are a Honda family. One we bought new, the other used. Neither has given us any trouble and they will be driven till they die!!! I would work hard to try to reduce your debt, pay off Harold and then start a car fund, putting what you can into it so you will have some money toward a new car WHEN you have to purchase something new.

 

[mikehn]

If it aint broken, dont fix it. I would stay put

 

[bankgirl05]

If you are "upside down" on your vehichle and have credit issues you will have a very hard time finding someone to finance you at anything near a decent rate. Credit unions usually have the most credit friendly policies and rates --so if your credit union is saying no, you wont have a lot of cost effective options. The good news is that most Honda made vehicles are tanks and last a LONG time with good care. I had a 1996 civic that had nearly 300,000 miles before it died. Do your best to keep Harold running and focus on paying down your loan. You will get there eventually -- its just not the right time yet.

I used to work for a credit union, and processing loans was the best part of my job. I completely agree with this poster's statement. If you have lowered credit scores and an out-of-skew debt to income ratio you WILL NOT get a better loan anywhere else. Oh, you may get a loan, at an extremely high interest rate, but those banks that will give you that loan will do so just to book the loan, the difference with the credit union is this: THEY care about your financial well being as well as thier own. They are not going to set you up into a loan that foresee becoming a repo issue in the future.

Find out if your credit union has classes on managing your finances, or if someone at thier credit desk will look at your credit report they may give you tips and advice on clearing up your credit.

Also, you said you are paying your Mother's mortgage??? Is there any way of changing this, ie downsizing her into a condo or appartment, moving her in with you, siblings helping out, etc???

 

[swilshire]

I'd drive the Odyssey for another 50 - 100K, regardless of my credit score.

Sheila

 

[mrsklamc]

OP-

I'm guessing you don't have a monthly budget that tells you where all the money is going? Start there, and then look at it and see what you can cut out of the budget. As others have said, since your credit union already turned you down, a loan from another source is unlikely- but it sounds like another loan would not be a good thing for you.

 

[EMAW_KSU]

but it seems like every month we have to use credit cards just to make it thru the month.

This is what you need to look at.

 

[tar heel]

OP -- I don't mean for this to sound unkind, but this scenario sounds like it might be the kind of behavior that got you into a financial mess in the first place. You don't need a new vehicle, you want a new vehicle. If the credit union says it won't give you a loan, that means the people who evaluated your application thins you can't pay for a new car. Even if you found someone to give you a loan, you would (I assume) be rolling your debt on Harold into the loan. So, you would be even further under water than you are on Harold. Think of the mess you would be in if you had a wreck and totaled your car. You would have no car and still have a car payment.

I would drive Harold until he falls apart and try to save a little money to use when he has to be replaced.

 

[i*heart*minniemouse]

OP -- I don't mean for this to sound unkind, but this scenario sounds like it might be the kind of behavior that got you into a financial mess in the first place. You don't need a new vehicle, you want a new vehicle. If the credit union says it won't give you a loan, that means the people who evaluated your application thins you can't pay for a new car. Even if you found someone to give you a loan, you would (I assume) be rolling your debt on Harold into the loan. So, you would be even further under water than you are on Harold. Think of the mess you would be in if you had a wreck and totaled your car. You would have no car and still have a car payment.

I would drive Harold until he falls apart and try to save a little money to use when he has to be replaced.

I was just going to make a similar statement. I have a 2003 Accord, 136,000 miles and WANT a new car. Hubby has a 1993 Civic with 200,000+ (I lost track) miles on it. He says we do not NEED a new car. We CAN afford 2 new cars, but who wants the car payments....we will drive them until we are in our 80's. I figure at this rate, the week after I get a new car, I will be too old to drive and they will take away the keys! ....oh well, more $$ for Disney vacations.

 

[anc876]

I was just going to make a similar statement. I have a 2003 Accord, 136,000 miles and WANT a new car. Hubby has a 1993 Civic with 200,000+ (I lost track) miles on it. He says we do not NEED a new car. We CAN afford 2 new cars, but who wants the car payments....we will drive them until we are in our 80's. I figure at this rate, the week after I get a new car, I will be too old to drive and they will take away the keys! ....oh well, more $$ for Disney vacations.

Same here. We drive older, paid-for cars. While a new(er) vehicle would be nice, no car payment is even nicer. Big, new, pretty cars equal (for most people) a big fat monthly payment. Cars are just depreciating "assets" anyway. We too like using the extra money for trips. Memories are priceless.

 

[sunshinehighway]

If the car is reliable and has no major problems, just keep it.

 

[bumbershoot]

Hondas are good! Keep it.



If I may, I would really recommend checking the Dave Ramsey book out of the library, the Total Money Makeover book. Follow his baby steps. Find happiness and a higher credit score.

And hey, I bet your mom is in a really bad situation, but...you can't afford to pay her mortgage. Seriously, you can't. She has to find something different; if you have siblings, get them involved, she needs to downsize, get a renter, move in with you, *something ELSE*, because going into CCs just to get through the month, when you are paying for her mortgage, means that *you cannot afford that*.

 

[Praying Colonel]

This owner of an 02 Odyssey with 170K miles and an 05 Camry with 160K miles says: keep the car!

 

[DisneyEater]

I agree with the previous posters. Keep Harold for hopefully 4-5 more years and when the payment goes away you can apply that to your credit cards and get yourself in a better financial situation.

 

[skw444]

Owner of an 03 Honda Odyssey with 160K miles and although I would LIKE a new car, there is nothing mechanically wrong with my car so I'll be driving it for several more years at least. Can't beat no car payments!

 

[Ruthie5671]

I used to work for a credit union, and processing loans was the best part of my job. I completely agree with this poster's statement. If you have lowered credit scores and an out-of-skew debt to income ratio you WILL NOT get a better loan anywhere else. Oh, you may get a loan, at an extremely high interest rate, but those banks that will give you that loan will do so just to book the loan, the difference with the credit union is this: THEY care about your financial well being as well as thier own. They are not going to set you up into a loan that foresee becoming a repo issue in the future.

Find out if your credit union has classes on managing your finances, or if someone at thier credit desk will look at your credit report they may give you tips and advice on clearing up your credit.

Also, you said you are paying your Mother's mortgage??? Is there any way of changing this, ie downsizing her into a condo or appartment, moving her in with you, siblings helping out, etc???

I'm sure they do offer financial classes, and I need to look into that. However, our feelings were hurt after they turned us down, so we just left without further dicussion. As for mom's mortgage, I wish there were other options. She has an extremely fixed income and is physically disabled. Even if she lived in another place, I would have to pay the rent. This way I know that in 7 years, the mortgage is paid off free and clear. I have a good fixed interest rate. But it's just one more thing.

OP -- I don't mean for this to sound unkind, but this scenario sounds like it might be the kind of behavior that got you into a financial mess in the first place. You don't need a new vehicle, you want a new vehicle. If the credit union says it won't give you a loan, that means the people who evaluated your application thins you can't pay for a new car. Even if you found someone to give you a loan, you would (I assume) be rolling your debt on Harold into the loan. So, you would be even further under water than you are on Harold. Think of the mess you would be in if you had a wreck and totaled your car. You would have no car and still have a car payment.

I would drive Harold until he falls apart and try to save a little money to use when he has to be replaced.

You don't sound unkind. I posted the question to get objective opinions, and I appreciate all of the input. Hubby and I talked last night and we decided to wait. As everyone has said, Harold is in good shape despite his high miles. We will continue to give him the TLC he deserves and pay our bills. Next summer, we will have two major bills paid off (one of hubby's old loans and the wedding loan) which will give us $400 in our monthly budget. I'm just going to work on being more thrifty and reading these boards for advice.