Getting financing for a car if you have terrible credit

ryanortegaismyfuture · 1 day

Try this: separate yourself from your situation a little bit. Imagine someone else is in your shoes, but that person isn't you. What advice do you prescribe? What is the best path forward?

ams1111 · 1 day

Starting as young as you have, about 15% pretax should go to retirement. For example, for someone earning $50K, the goal would be $7500 of pretax dollars. Assuming about 20% tax, a $5000 funded Roth IRA would equate to approximately $6250 of pretax dollars ($5000 into the Roth and $1250 to the government). This would leave about $1250 pretax to put towards retirement to complete the 15%.

The 15% is abitrary, put a little more if that's your style or put a little less. Personally, for the last three years I've put 20% of my pretax income into retirement savings.

ryanortegaismyfuture · 1 day

Correct. Different strokes. Thanks for replies.

ryanortegaismyfuture · 1 day

We shall agree to disagree.

ams1111 · 1 day

Excellent. You're in good shape. If I were in your shoes, I'd probably go into the 401(k) and invest another 3 percent to get me up to 15%. Even if not matched, you are getting the government to kick in approximately 25% due to the tax advantage of the program.

ryanortegaismyfuture · 1 day

You're absolutely correct. I made a judgement without all of the facts.

My opinion holds that if one files bankruptcy and then six months later borrows $26K for something as silly as a car (which can be had for 1/4 that price), then s/he did not learn a lesson of not taking on more than is necessary. If you can argue that it is a good decision from a financial standpoint, please do.

ryanortegaismyfuture · 1 day

My point is lost: if you must borrow $26K for a car, then you cannot afford it. Prove to me otherwise.

There used to be a time when this adage was common sense: "if you can't afford to buy it twice, don't buy it."

ryanortegaismyfuture · 1 day

OP is not interested in being reasonable; s/he wants people to say it's OK to spend $500/month on a car.

ryanortegaismyfuture · 1 day

I apologize for jumping on you there. I am sorry.

Your numbers still don't add up, though. If I count the $350 bill as every month (which it isn't) it works out to 2750. Where is the extra 500?

Furthermore, where is the $2500 going out of your paycheck? (70K/12 = 5800 - 3300 = 2500) I understand taxes and insurance, but that doesn't come out to 2500 a month.

And, hang on a tick, $175 a month for a cell phone? Are you mad?

ryanortegaismyfuture · 1 day

When you're broke, borrowing $26K for anything is insane. Short term, it might have the illusion of helping a dismal situation, but long term it is not a smart financial move. It shouldn't be easy to get your way out of things you behaved yourself into.

2451012 · 1 day

Thanks for taking the time to write that out -- I appreciate your viewpoint.

I understand the desire to take as little risk as possible from the employer's perspective, but in some states this can lead to more trouble that it is worth. Simply hiring a "contractor" (who works are your primary facility and has a true employee role) and seemingly absolving oneself from any unemployment or other business taxes that come with hiring an employee is deceitful at best and illegal in some instances -- furthermore it doesn't necessarily protect the corporation or hiring party at all.

Secondly, if a business cannot offer a competitive salary (not just dollars, but perhaps nearer-term vesting equity), then the business should reconsider its hiring needs.

ams1111 · 1 day

Nice work, you're doing great and are doing better in terms of personal finance than 99% of your peers. For 2013, it might behoove you to spread your Roth IRA contributions out monthly instead of investing it all within the first half of the year.

Tax adjusted, what percentage of your annual income is currently allocated to retirement savings?

ryanortegaismyfuture · 1 day

Yes, yes there is. Going into debt AGAIN (and $26K on a car, no less!) after filing bankruptcy is incredibly irresponsible. No lesson learned at all.

ryanortegaismyfuture · 1 day

OP replied then deleted.

$3200-$3300 net income and explained approximately $2400 in expenses.

How are you paying out almost 45% of your salary right off the bat? Also, with the numbers you gave me $1000+$550+$200+$500 = $2400. Where's the other $800-$900?

And, seriously, a $500 car payment? God damn, man.

2451012 · 1 day

Furthermore, increasing your pay after one month? That's silly. Hiring you is a risk for both parties, especially at a startup, so try to negotiate a real salary based on a 90-day probationary period at which point you become a full employee or become unemployed.

ryanortegaismyfuture · 1 day

Your income is $70K per year and you can't save money to pay for a car in cash? Why not? Where is the money going?

ryanortegaismyfuture · 1 day

A very, very reliable (nevermind decent) car can be found for much less than $14K. My '02 Corolla (worth probably $4K) is significantly better than decent.

ryanortegaismyfuture · 1 day

That's ridiculous and irresponsibly. Filing bankruptcy because one was not able to pay debts and then borrows $26K for a car six months later. Does one ever learn?

ryanortegaismyfuture · 1 day

If you have terrible credit, your need a car loan like you need a hole in your head (further, no one should ever have a car loan). Buy a $2K car you can find on Craigslist and figure out a way to make it work before you borrow money for a vehicle.

2451012 · 1 day

I have two solid pieces of advice: (1) get everything in writing and, most importantly, sign a win-win contract amenable to both parties, and (2) be sure to use an accountant if you file a schedule C.

Entrepreneur here: I take issue with two items -- why not hire you directly as an employee (hiring as a contractor isn't necessarily legal if you are, by all definitions, a direct employee), and why not pay you a competitive salary? If the product is viable and/or funding is in play, there should be no reason not to do either. Be a little wary.

domelife · 1 day

I should've stated "from a risk standpoint". Your point is well taken when risk is not taken into account.

methmouthjuggalo · 1 day

That's life, though. Think about much more difficult it would've been with a bunch of debt hanging about.

domelife · 1 day

In an underwriting situation (home mortgage, car loan, etc), a lender should look at your income and your history in order to make a determination of your creditworthiness. They'll also take a look at your assets (cash, investments, etc) in order to see how well you handle money. If you've rented an apartment or a house for a number of years, they'll take into account how many times your payments were on time. Similarly with something like a cell phone, gas, water, or electric bill. Each of these things shows you've met obligations in the past and are inclined do so in the future.

Some lenders rely heavily on FICO based lending. FICO based lending means your credit score is most relevant to them -- a higher score dramatically increases your chances of getting a loan. What the FICO score is not an indication of is wealth... it merely is a debt-based score. You could have $1 million in the bank and have a FICO score of 0. Meanwhile, you could have $50K in credit card debt and have a tremendously good FICO score. To whom would you rather lend money?

domelife · 1 day

Why do you need a credit card? As in, what is your goal with it?

If you're trying to buy a house with a mortgage, you can ask them about traditional underwriting or manual underwriting in lieu of FICO based lending.

vaporizor · 1 day

What city are you in and what airline do you fly most often?

mrzulu

TROPHY CASE

mrzulu

TROPHY CASE

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