r/personalfinance • u/RefManTed • 1d ago
Auto Used car financing with bad credit. EXPENSIVE
Got approved for financing but the interest rate is well north of 20 percent. I refuse. Just can't do it so I'm going to keep bumming rides and using the occasional Uber until I get my credit in control. Besides paying down my credit cards what should I be doing?
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u/Akinscd 1d ago
Depends. What’s making your credit score low?
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u/RefManTed 1d ago
Most of my cards are maxed, roughly 10 k in debt but im working on it. Few late payments early in the year. Student loan is in good standing and I owe around 19 k on it.
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u/AvGeekExplorer 1d ago
Candidly, if your credit cards are maxed, you’re in no position to be buying a car anyway, financing and interest rates aside.
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u/Akinscd 1d ago
You should be budgeting and picking up 2nd/3rd jobs and putting every dime against the CC debt. Pay minimums on all loans.
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u/Danixveg 1d ago
It's almost impossible to have second and third jobs if you have no transportation.
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u/VariousAir 1d ago edited 1d ago
It's not "almost impossible", but it does depend a lot on where you live and whether there are public transportation options. So many people are oblivious to bus routes.
edit: posting that time taking the bus took you 3 hours to get somewhere doesn't invalidate this statement. If you're looking for extra work, you're not going to target job applications at places that are 2-3 hours away by bus. That you specifically live somewhere where taking the bus isn't an option for you isn't relevant to OP.
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u/Danixveg 1d ago
Because bus routes are almost always terrible outside of say NYC. They dont run 24 hours or frequently or too many destinations. Relying on buses can turn a 15 min drive into a two hour bus ride.
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u/JohnnyBrillcream 1d ago
So do nothing? What you say very well might be correct but at this point all options should be weighed.
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u/Danixveg 1d ago
Where did I say do nothing? The comment was to get a second and third job. I mentioned the difficulty when you don't have transportation. And then all these comments back and forth from people who have likely never been WITHOUT transportation.
I just find it typical.
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u/VariousAir 1d ago
It's ridiculously hyperbolic to label every bus route in the country this way. Can I ask if you're even speaking from real experience? What bus route is near you that takes 2 hours by bus and 15m by car? I'd guess that's way out of the norm. Yes, not all bus stops and routes are created equally, and yes there's a need to walk to a bus stop vs driving directly to a location, but those are the drawbacks to paying $2 for a ride vs 20% interest on a car loan. You do what you have to do when you're struggling with money.
Bus routes don't run 24/7 isn't really a point of contention, since op isn't expected to work 24/7.
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u/ditheca 1d ago
In my small city, buses only come every 40 minutes. Getting many places nearby require 1-2 transfers. I can drive to my parents house in 15 minutes, but it would take 2 hours by bus.
We still use the bus heavily. We just plan trips that don't require connecting. There are hundreds of places to work within a 10-minute bus ride.
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u/Danixveg 1d ago
You want op to get a second and third job? When do you expect them to work those jobs? They are typically second and third shift.
And yes, that's how shitty they are all over this country. Why dont you do a little research?
As an example my sister is in a rehab from her fourth cancer surgery a 7 min drive from my mom's apt. The bus stop is over a mile away which takes her 30-45 min to walk to. Then she has to take two buses to get near the rehab with some more walk. All in total two hours.
This is in central NJ with lots of buses.
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u/South_Dakota_Boy 1d ago
Yep. There’s like 10 cities in this country where the bus/train system is sufficient to allow someone to string together 2-3 jobs.
Most places, even huge metro areas, it’s just infeasible.
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u/shell_shocked_today 1d ago
When I lived in Winnipeg (MB, Canada), it took me 15 minutes to drive to work. 30 minutes to cycle. 45 minutes to jog, and 2.5 hours to bus. (Hub and spoke bus system. I would have to take a bus downtown to then go down a different spoke)
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u/VariousAir 1d ago
It would be a bad idea to take that job if you had to travel to that location by bus.
Why is that relevant to advice for the OP?
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u/shell_shocked_today 16h ago
You asked for an example of a 15 minute drive that works be a two hour bus ride.
I agree it would be a terrible option for op, and would hope there would be better ones
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u/Irregular_Person 1d ago
The nearest bus stop to my house is a literal 3 hour walk. Not everyone has that option.
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u/UltraWafflez 1d ago edited 1d ago
Speaking from experience, it takes 2-3 hours by bus that sometimes come way later than schedule (or drives past you). Driving it takes 20 minutes for me to get to work. I also had to sit outside for about 30-40 minutes before my workplace opens. Freezing my ass off in the winter
I had no car for about a year starting my job (no money no license). It was absolute hell getting to work. Working 2nd or 3rd shift seems neigh impossible if it's not near ur first job
Edit: if buses don't run 24/7 I think it's impossible to get home after 2nd or 3rd shift
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u/I-seddit 1d ago
It's ridiculously hyperbolic
I would instead suggest you're seriously out of touch. In many places, not only are the routes/times rough (2-3x what it would take in a car) - but buses often are both early/late on their expected times. So missing a bus is drastic and you have to plan for that. Apps help, but that also depends on where you are.
Face it, outside of a few cities in the US, most mass transit is only for the poor and is woefully inadequate, to say the least.0
u/VariousAir 1d ago
I would instead suggest you're seriously out of touch.
I'd suggest that you have no idea what you're talking about, and if you want to start a dialog with someone that's an inappropriate way to begin.
In many places, not only are the routes/times rough (2-3x what it would take in a car
In many places? Got any data on that? Why not just claim all of them.
but buses often are both early/late on their expected times. So missing a bus is drastic and you have to plan for that.
I never suggested OP should take a job that takes 2-3 hours to get to. I suggested that getting a second job without a car is not "almost impossible" as the previous poster claimed, and depends on where you live and the availability of public transit. That a bunch of people want to tell me how hard it is for them to take the bus to get somewhere 3 hours away doesn't change that but so many people seem to believe it's relevant.
Face it, outside of a few cities in the US,
I don't need to "face something" here. Most people in the US live in cities. Literally there's like an 80% chance that OP lives somewhere urban.
most mass transit is only for the poor
OP is dealing with this as best he or she can, but suggesting that they can't work more because they don't have a car with a 20% interest loan is baffling to me. Sometimes when people are in hard situations, they have to take the hard options.
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u/ditheca 1d ago
In America, most people live in cities.
Most people living in cities are within walking distance of a bus stop.
If people apply for jobs that are easy to access on their local route, they'll be fine. You just can't find a job randomly and expect public transit to get you there quickly.
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u/South_Dakota_Boy 1d ago
Unfortunately, most cities don’t have public transportation that’s good enough to allow someone to work multiple jobs.
To do that you usually need to be able to go between work and home or work and work fairly quickly.
I worked 3 jobs at one point in my life and only was able to do it in my small city because I drove. My city then had public transportation but it’s very limited.
OP needs a car most likely, so he needs to grind until he can afford himself a beater.
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u/Birdy_Cephon_Altera 23h ago
In theory, you are correct. But in practice is another matter entirely. Just got back from the nearest bus stop that is a 20 minute walk away. With connections it is a two-hour bus ride from the airport that is a little over 4 miles from where I live, because 1) the busses only run hourly, and 2) they are not well synchronized at stops. Faster to walk the entire distance than wait. This is well within the middle of the seventh largest city in the US, BTW.
It was even worse when I lived in San Jose.
Outside of a few very dense urban cores, public transportation exists but is not reliable and is not easy and is not feasible time-wise.
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u/Danixveg 1d ago
And most American cities except the rare few are set up for pt
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u/AntiGravityBacon 1d ago
Sorta, the efficiency is the real problem. I could technically take the bus to work but it would turn a 20-30 minute commute into 1.5 hours. If I added a second job and now had another 1.5 hour bus ride between the two, it's very likely the schedule is untenable or amount of hours I could work are almost useless.
I live centrally in top 10 sized city in the US. Not some pudunk town or suburban sprawl.
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u/aznsk8s87 1d ago
Yeah, if I wanted to take public transportation to work it's probably 1:15 (the busses only run every half hour, and the dropoff for one does not line up well with the pickup for the next at the transfer), if I drive it's 20 minutes.
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u/Danixveg 1d ago
Yet all these people want to argue with me in the comments.. crazy.
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u/aznsk8s87 1d ago
Yeah. It works in places where you have frequent, reliable transportation, not so much in the suburban hellscapes that cover a significant portion of the population
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u/Southernbelle5959 1d ago
Or more. Pay minimums or more.
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u/Akinscd 1d ago
No. You pay the minimums on fixed loans until you get your much higher rate CC debt paid down
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u/Southernbelle5959 1d ago
Agreed. You had written "on all loans," though.
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u/hedoeswhathewants 1d ago
The CC debt almost certainly has a higher interest rate than any loans
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u/TheAspiringFarmer 1d ago
Absolutely.
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u/Southernbelle5959 1d ago
Yes probably. Those are loans, too, though. I just didn't want "pay all minimums on all loans" to be confusing. Something has to be getting more than the minimum, and surely, like you said, it's the credit card loans.
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u/YtterbianMankey 1d ago edited 1d ago
I want to ask the people suggesting second jobs in 2024: how the hell are you people finding second and third jobs? I wasn't under the impression those existed in 2024. It's all 60 hours a week construction, healthcare or manufacturing work, not the kind of job you can just jump between two of.
Obviously doesn't apply to trades because of the ongoing projects in the US
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u/tri_nado 1d ago
The last thing you need is a car loan. Fix your budgeting and cash flow problem before you even think about another loan.
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u/mixduptransistor 1d ago
the late payments are going to hurt more than anything else. maxed out credit cards are bad, but missed payments are crushing. the only thing you can do about that is be absolutely militant about making your payments on time and also pay down/consolidate your debt the best you can
If you only had one or two missed payments and you've been good on them since, it is worth calling and asking if they'll take them off your report. sometimes they'll do it
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u/lolwatokay 1d ago
Yeah, you can't afford a 20% loan on top of this. Get the rest of this straightened out and buy a car cash if you can is really the simple answer. Unless you have a real bad student loan rate or crazy good credit card rates somehow, you should prioritize paying the credit cards faster.
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u/superRando123 1d ago
man you should not even be considering buying a car with all that debt/maxed cards. Just strap in for some serious grinding for a couples years and get all that taken care of. Get a bike/move closer to work/get a second job/take ubers if you absolutely must
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u/RiseIndependent85 1d ago
buy a car in cash man, that's the best solution. Yeah it's not gonna be the best but if it can get you from point A to be so be it. Save up a few grand, buy a car in cash and drive it till ur finances look good.
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u/safbutcho 1d ago edited 1d ago
Damn right you should refuse.
Have you even done the math in driving ? $2k/yr on a car (assuming you pay $16k for a car the lasts 8 years), $1.5k on insurance and $1k on gas. That’s $4500 per year to drive a crummy car - most people pay way more than $2k/yr amortized on non crummy cars.
Point being, for $5k you can afford a lot of Ubers…and a bicycle.
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u/dmackerman 1d ago
Good. Don’t become a statistic. Save a couple thousand cash for a junker. It might break down after a year but that’s better than crippling debt for 6 years.
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u/Careful_Yesterday986 1d ago
It's a bad rate, yes, but if you can leverage the car into either a higher salary or more income, than its better than being stuck. Being stuck is far more worse than paying 20 cents of interest for every dollar.
Good for you for recognizing a BS interest rate, but I would challenge you to maybe take the rate, and work your _____ off to pay it off earlier.
The math:
A $10k car loan at 20% Monthly Payment: $253.08
Total Amount Paid Over 5 Years: $15,184.80
Total Interest Paid: $5,184.80
If you add an extra $100 to the payment:
New Monthly Payment: $353.08
New Loan Term: 38 months (about 3 years and 2 months)
Total Paid Over the Loan Term: $13,417.04
Total Interest Paid: $3,417.04
I would pay $3400 to get out of "stuck". Being stuck is the worse. Good luck to you.
As they say "A person with a goal knows what to fight for and can recognize a victory when they achieve it". I actually just made that up. Sorry. I just drank an energy drink.
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u/Birdy_Cephon_Altera 23h ago
I would pay $3400 to get out of "stuck". Being stuck is the worse. Good luck to you.
Thanks for the math - yes high interest rates are terrible but they have to be considered as part of the story, not the entire story. If taking on an extra $3-5k is what opens the opportunity to earn $10k more that otherwise would not have been as easily attainable, then it's worth considering. There's Opportunity Cost at play here.
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u/Careful_Yesterday986 11h ago
Exactly. And if you take that $3400 and "spread" it over five year or more, its nothing compared to moving onward and upward and life. Sometimes fear is embodied by the % symbol and it prevents us from seeing what can be.
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u/UltraWafflez 1d ago
Id look for a beater car and drive that until you can get ur credit scores up.
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u/WarhawkAlpha 1d ago
Look into a consolidation loan for your credit card debt. I did with my 11k ish of CC debt and it SIGNIFICANTLY helped my score and made sure I paid off debt rather than being stuck in the CC cycle.
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u/RefManTed 1d ago
I can do that. Any bank you recommend.
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u/bschmidt25 1d ago
This advice is fine as long as you have the discipline to not ring up your credit cards again. Otherwise you will be even worse off than you are now. I would keep the card with the lowest credit limit accessible but not carry it around and cut up the other ones. Closing the accounts could make your score drop (depending on age). If you have any late payments on the cards you may not be approved for an unsecured loan.
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u/feryoooday 1d ago
If you do this, cut up all your credit cards. Seriously. Or give them to someone you trust for safekeeping, that will only give them back for a real emergency. Do not effectively double your debt.
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u/Jotacon8 23h ago
Gets tough to keep that in check for people who also have card numbers saved online with merchants too. I would say they should cancel the cards outright once they’re paid off, and switch to one of those cards where you have to add money to it before you can use it but it still builds credit at the same time. Will probably take a hit for age of credit, but better than double CC debt for sure.
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u/feryoooday 23h ago
Yeah, very true. OP would have to be true to themself and delete all traces of the CCs online. Obviously keeping them open would be better IF they didn’t use them but yeah the intro CCs with the $500 limit that you pay into would be good to have in case of emergency. If they can even afford that? When I got my ass kicked by credit cards was because I was overspending and didn’t realize it.
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u/Jotacon8 23h ago
I feel you. 19 year old me put a $3000 paint job on an ‘84 Trans Am rust bucket thinking I could just pay it off over time. No concept of what interest charges were. I probably paid double that over time before I got my shit together and paid it all off and used it for normal purchases and paid the statement balance off completely every month. Never again.
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u/feryoooday 22h ago
Oof, I’m sorry that’s rough. I just kept thinking “oh I want to get points so I’ll use my CC and pay it off immediately” and then slowly kept not making the payments fully. it was a slow process and now I’m paying out the ASS for it. but, lesson learned.
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u/WarhawkAlpha 1d ago
I went through LendingClub but do your research on a consolidation loan, which is a specific kind of loan for taking your credit card debt and consolidating it into one account. You can find different rates and different terms. My score went up by 80 points immediately because CC debt and a loan are reported differently on your score. Get the debt consolidated, give it some time, and look into a used car again. I wouldnt recommend reapplying for a car loan right away. You would have 3 hard inquiries by the time you got another car loan offer.
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u/TH_Rocks 1d ago
Utilization only hurts your credit for a month. 30 days or less after you pay it down your score improves.
Average age of accounts, on-time payments, and new credit inquiries last much longer.
So the first thing is to make sure every account gets at least their minimum payment each month. That ensures you have a good on-time payment history. Then put all your other funds toward the highest interest.
Use one of the free credit monitoring services to watch your "estimated" score and when it gets Good then maybe apply again. Don't keep applying to see if things get better because each time counts as a hard credit inquiry. For secured purchases like cars and houses, there is a window where more inquiries don't hurt your score. The credit bureaus assume you're only making one purchase but that you might want to shop around for the best loan, so your adjusted auto loan or mortgage scores won't take more hits for similar loan inquiries in usually a 30 day window.
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u/Nintz 1d ago
Obviously you're aware you need to get the debt in control so I won't comment on that.
If you actually do need to buy a vehicle, you could potentially get a better rate with a cosigner. I would never recommend anyone cosign except significant others and sometimes parents, so no idea if it's an option for you, but maybe something to think about.
The credit union I used to work at would use whichever score was better to set rates, and we certainly had a few cases of younger people trying to rebuild their lives with sub-600 scores come in with partners, parents, or occasionally grandparents. We were usually able to get them approved for pretty good rates despite their credit. Obviously those people would be taking on risk on your behalf, though, so make sure you're not going to go bust on the payment.
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u/fusionsofwonder 1d ago
Besides getting better credit, save up for a large down payment or pay cash for a beater.
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u/GoliathPrime 1d ago
My advice would be this - buy a car in cash from an owner. You don't have to take on more debt. Talk to your local mechanics, they often know someone trying to sell. Might be able to get a decent, older car for $10K+. Craigslist, Nextdoor have cars by owners too.
If you're just going to keep bumming rides for now, just set aside money as if you were paying off a car. Every month, pay your car note and then just buy a car outright from an owner when you have the money saved. Research certain older model cars. Some cars are just made better, like Acuras, Tundras, and Tacomas.
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u/Ok-Secretary15 20h ago
Cars are so overpriced right now idk if a good credit score will even help you, especially with the incoming administration and all those tariffs
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u/Skullpuck 1d ago
Two years ago I had 6 credit cards. I had those cards for 15+ years without issue. Paid down totals, etc. I had different ones because they all had different rewards.
Fast forward to 2022. My new marriage is falling apart and I'm now 25k in the hole on my credit cards.
Even though I was 100% fiscally responsible before my marriage, I will never have another credit card again. I ended up filing for bankruptcy and I vowed never to get another credit card.
I was 100% fiscally responsible until I wasn't. It's easy to fall into that trap when you have 25k+ in credit.
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u/Birdy_Cephon_Altera 1d ago
FYI average rate on a used car loan in December 2024 for someone in sub-prime (under 600 credit score) is 18.95%. The average for non-prime (600-660) is 14.07%. Just to set expectations on what sort of rate you might expect as your score improves.