The Wall Street Journal recently had an article regarding credit card companies and their large number of high-risk accounts. The companies are going to be required to keep higher cash reserves on hand because so much of their business is 'sub-prime' (if I remember the phrase right).
The article went on to say that there are something like nine time more credit card solicitations sent out each year than there were 10 years ago and the requirements have gotten very low. (For example yesterday American Airlines sent me a "Gold Card" application that only requires an income of $15,000 per year)
Now back to the point: the article said that the response of the credit card companies is going to be to stop offering accounts to high risk borrowers.
Do you think that this will extend to car loans, and if so, will it increase the difficulty of recently bankrupted people in getting loans?
Well, there are 2 ways to see this when discussing applicants who've filed Chapter 7 and had their debts discharged.
On one side, these folks are almost debt free and can't file bk again for 6 years, a plus.
On the other, something caused them to fall under the waves into bk.
Really depends on the reason for the bk. If something like a layoff or uninsured medical bill, this person may be a fine risk once the causative factors are permanently cleared. If the reason was impulsive spending and bad financial stewardship, the party's likely to screw up again.
Possibly some "bottom feeders" will drop out of the credit industry. I think there'll always be a second chance out there for solid people who've had some recent bad luck.
Is that before or after taxes? Annual housing costs alone could exceed that figure. A new, (or even used) car would be the furthest thing from my mind at that income level. Survival would be enough of a challenge.
The $15,000 is before taxes, but usually they have a little disclaimer in there, that if you don't qualify for the "Gold" (or platinum, titanium, Xantium-54, Iridium-29b, etc) card, then they'll process you for a "Classic" card, which is just they typical high-apr credit card. I think the $15,000 is the limit they set for the most bottom-feeding card they offer. They just word it so that you think you can make $15,000 and still get a nice card.
Hello all, I wanted to let you guys know, that I am awaiting my discharge letter. This should be here around OCT 15. I have spoken to a few dealerships, and they are all trying to get me in the door after I get the discharge letter. My used sable had a water pump go out which cost me 230.00 to fix. God knows what will go out next. I have saved up around 2,500 and will use that as a down payment on my car once the letter comes in. I plan on buying a 2003 Toyota Corolla. I will keep you guys posted. I am sorry that I have not posted recently (have been too busy at work).
This whole thread sounds like some sort of sick joke. Gotta have that new car, eh? I'm sure your payments (every one of them) on the new Corolla will be higher than the water pump on the Sable...
I'm sure a used Honda Accord or Civic would be just as reliable as that new Corolla. I just hope you have a hefty down payment or you're going to be immediately upside down. You don't want to go back to where you were.
Anyway, has anybody seen SaveKaryn.com? What a brilliant idea! I don't condone her prodigality, but certainly praise her chutzpah and innovation!
...I'd just keep putting money into the Sable as it needs it, instead of blowing my whole savings on a new car, and being committed to a payment that's probably going to run $300+ a month.
I seriously doubt that Sable will run you $300 a month in repairs! I've never had an old car cost me that much, even when I amortize the purchase price into the equation. My old '79 Newport, purchased for $250.00, only ended up costing me about $100 a month total over the 2 years I had it. And that's including a rebuilt transmission! I think the worst was my '89 Gran Fury, which came out to around $150 a month.
Well folks, glad to see all the nice comments and all the same kind people are here waiting my failure. I will get my car and I will keep you all posted. Untill you have drove down the highway in 90 plus heat and was scared to turn on the ac, you would not want a new car. It is stressful to worry about what will go wrong next. I will let you guys know what happens. Thanks Keep the positive posts coming. I always like a good laugh.
...but that the progidal turn from their ways and save! Credit cards can either be helpful servants or cruel masters. I remember being in some debt despite living a very modest life while either un or underemployed right after college. I didn't go out, buy lots of stereo equipment or fancy clothes. If I did, my debt load would've ballooned to impossible levels. Today, I carry but one credit card.
You asked a lot of the questions I was curious about with Mazda. Good post.
I guess the thing that's disconcerting about his situation is why must he have a new car right after filing bankruptcy?
What's wrong with buying a nice used 2 or 3 year old vehicle and keep it up to snuff with regular maintenance. Then drive the thing for as long as possible then when he was more financially stable then possibly buy something new.
The mere fact that he could still get financing for a new car at all is frustrating to someone like me and my wife, since we both work hard and drive very used cars. We dug ourselves out of a financial hole also, it took time but it can be done.
Kudos to you for doing the right thing. Some people like to go through life being a victim. Nothing is ever their fault. It's good to see someone who took responsibility for his actions and got his stuff together. I think we all know Mr. Mazda doesn't NEED a new car, he WANTS one.
Hello folks, it seems to me that a lot of people are suffering from A.D.D here. The topic is not "Bankruptcy morally right or wrong". The topic is getting financing after a bankruptcy. Each person here seems to have a different view point on the morals of filing bankruptcy, which is fine but I did not ask for any advice on what your moral position is. Lets try to focus here on the topic....again it is APPROVAL AFTER BANKRUPTCY. I created this post do to the fact that I had a hard time finding actual stories on edmunds in regards to people getting approved for car loans after BK. As for now, I have already explained my reasons why I feel that a used 2 year old car is not the best investment. If I am going to be in a car note, and if you look you will find that 2 year old toyotas and hondas sell for very similar prices as new ones. If I am going to be in a 5 year loan and plan to keep the car, why would I pay on a used car that god knows who did what to, if I can get new. Check the prices folks... I am looking at toyotas and hondas and find that you can only save 1 or 2 thousand by buying a few years old. The whole point is that it is a risk. I plan to keep this new car 8-9 years so going used makes noe sense. My letter is coming on or around OCT 15. I plan to buy a basic new car that will do what I need it to do. I am the one that is worrying each day when I start up that sable not you. I have lost 230.00 and a few days of work when my water pump went out on that car...If I keep missing days, I will loose my job and will be in a worst situation. I drive 50-60 miles easy a day...so a reliable car is a must. This will be the last time that I explaine why I need or want or anything you want to call it, a new car. Lets stay focused on the topic folks.....APPROVAL AFTER BANKRUPTCY. This is what this post is about. And by approval, I mean credit approval...not moral approval from the guys at edmunds. Thanks.
You need to grow up! Like some of the other posters have observed, you sought advice (or maybe justification) for the plan you had in mind to "fix" your situation. However, you are only receptive to advice you feel is in line with what you have already decided. After watching this subject since you opened it, I have come to the same conclusion many of the others have. Unfortunately, you will be right back where you are right now sometime in the future. You have taken what you think is the "easy" way out and you will not hesitate to do it again when you get yourself in this bind again....and that WILL happen. Good Luck.
2016 ES350 Lux/Atomic Silver 2017 Accord Sport CVT Mod Steel Metallic
But above posters are correct, Mazda. When you ask a bunch of folks on an Internet bulletin board you are going to get what you more or less have gotten. The peopel in here are of all different professions but very few are expert debt counsellors or financial advisers. Their advice is going to come with their feelings on the subject and, yes indeed, their judgements of what you are up to.
Now I'm the last guy you could accuse of such things but I do believe you are rejecting some perfectly good advice in here because you want to block out what you don't want to hear by calling it a moral judgement. It IS a moral decision whether you want to admit that or not. The morality of the lenders - and I do not deny that some credit card companies and such these days are pretty close to being loan sharks - has nothing to do with your own sense of morality. They are separate issues.
I would also say that in terms of depreciation I think you vastly underestimate the market. First, even Honda and Toyota depreciate more than what you are saying and second there are perfectly good, dependable alternatives - Nissan and Subaru sprin immediately to mind - that depreciate more quickly. The fastest depreciation hit you can possibly take is just signing your name on the deal.
That said, I do applaud pieces of your game plan. Loads of folks in your shoes run out a lease in order to reduce monthly payments which is certainly a prescription for disaster and, as lemko described, a way to get buried beyond your ability to recover.
Keep us posted and continued good luck.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
The decision has already been made and he is simply seeking affirmation of that decision. He isn't getting much of it here so he's defensive. Pretty classic Psychology 101 stuff.
"I had a hard time finding actual stories on edmunds in regards to people getting approved for car loans after BK. "
Think about it. Since the banks WILL do it, maybe there aren't very many stories because it's not a good idea. It certainly puts pressure on you not to get into payment trouble again...
Here's an article you may want to read. You'll have to cut and paste the two parts of the link together as Edmunds won't permit a link of more than 115 charachters. Perhaps someone here can help with that.
mazda, you say that you keep posting so you can let people know about approval after bankruptcy. And yet you haven't yet been approved after your bankruptcy. Until you are, your posts, which I think have an air of self congratulation that your debts have suddenly disappeared, will continue to annoy people who know that your debts have NOT disappeared just because you no longer shoulder them. Your debts will be passed on by your creditors to people who pay their bills. If you don't want to read what people who pay their bills think of your situation, maybe it would be better to just wait to post until you can say something about your purported subject.
...is that an old Sable can be a big money pit. I once drove a 1992 Taurus with 100K+ miles and was in constant fear of it self-destructing. I paid more attention to the steadily advancing temperature gauge needle than the remainder of the instruments. The only way to make the needle go down was turning on the heater in the middle of an early summer day. Horror stories of Ford 3.8 V-6s self-destructing are enough to keep me away from these cars as used purchases. The reputation of their transmissions makes me even more wary.
That aside, consider a good used domestic. I highly recommend a 2000 or 2001 Chevrolet Impala. This is one car I'm confident will see you through 8 or 9 years of ownership with little trouble and will probably cost less than that new Corolla. An older Lumina might be worth considering. Sure it's not stylish but you get almost Camry-like reliability for a fraction of the price.
Getting approval for a car loan after bankruptcy sounds easy. Just looking at the screamer ads in the newspaper is enough proof. Making the payments, on such terms, is infinitely more difficult.
Look folks, some advice here has been good and I appreciate it. As for the comments that some have made like " I hope you fail", "you will suffer", "you will end up back where you started", these are useless and very low class. I am not seeking approval for what I have done. I will rebuild my credit and will do the right thing for me. The whole point is that what john doe thinks of me or what I have done is of no matter to me. The insults are useless. I will continue to post on my progress even if it makes some folks mad. I know that some here would love to see me get stuck with no car but it is not going to happen. The business world needs consumers, even the ones that have made mistakes in the past. The mad people here can post all day long on how they have been victimized by me and others alike, but at the end of the day, a bank somewhere will need money and they may just want my money. So lets grow up and act like adults here...again folks....this is about financing after bankruptcy not about who is doing the right or wrong thing. One guy here said "it is not fair that me and my wife pay back our bills while others can just do chapter 7 and have a fresh start" well guy, the American system is designed in a way that you have the option to get out when you are in a bind. So cry, weep and whine all you want but stick to the topic.
It may not be financially wise to buy a new car if you feel that you may - ever -have any problem whatsoever in making the payments on it. I also note that the job you have now didn't get the payments made once before. Are you planning on looking for a new job?
Potential employers do credit checks now before making employment decisions. If you screw this one up by missing some payments (which will show up on your credit history), it may be a long time before you get a decent job. I assume that you could use a better job since the one you are working now is 50 miles away and isn't paying the bills.
Our company, as well as approximately 40% of industry now use this method of screening applicants. Read the article in the Washington Post that I gave the link for. Companies use this because responsibility in paying bills is a predictor of job performance. One bankruptcy may not count against you, but a bankruptcy followed by more missed payments afterward may be viewed as a predictor that you are not a desirable employee.
This isn't intended to be mean or sarcastic. It's intended to point out that your choice of buying a new car when you may not be able to afford it may have long term consequences.
Don't fall into the trap of thinking that the bank would not lend you the money if they didn't think you can afford to make the payments. They will.
There's quite an interesting article in Wednesday's WSJ about mortgage loans... With the economy slowing, foreclosure rates are up. Many of those losing their homes are not unemployed but just have less hours of work. They were given loans by the banks that they could barely afford. When things changed they couldn't afford them.
I assume that you'll be taking a 60 month loan. Are you confident that your income will remain stable every month for the next 5 years? That you won't incur any new currently unforeseen expenses?
Did you foresee the expenses that made you bankrupt the first time five years in advance?
An older car on a 2 year loan would be a much smarter way to go.
Darn,I'm going to have to rethink the relationships I have with my customers.As it is right now they seem like an ungrateful lot.If a business(any business)enters into an agreement to sell it's product to someone it is not extending a privelige.Banks sell money.They compete with each other for business.To get this business they "sell"their product-low rates,free toasters,no closing costs,etc-anything that will bring in business.I don't know of any business that can survive by selling you on the privelege of doing business with them. S ure,people with spotty credit pay more -if-they want it.This customer is just as valuable to a company as the "good"credit customer-they pay more for the product.Most businesses have a mixed bag of customers.If only half of these customers pay you must charge them the appropriate "vig".The steady payers benifit -lower rates-and the "others"pay the price for their"sins". I know this off topic,but it's called capitalism.There is no morality involved just a bottom line.Mazda is simply making a business decision.Whether it's a good one or not I have no way of judging.I'm sure the executives at ENRON and WORLDCOM have much better credit ratings then Mazda-would I rather have them working for me?It's a tough world out there and a person has to do what he thinks is right for himself and his family.This seems to be Mazda's motivation.I hope he has made the "right"choice.If he is wrong our system will allow him to try again-that is a good thing.Remember,debtors prisons cost money and the residents are removed from the customer base.
Hi everyone. I just wanted to post a quick reminder in this discussion that it is inappropriate to insult other community members in your posts, regardless of how much you may disagree with their on a particular subject. All posts that contain insults will be deleted on sight. Thanks.
"It's a tough world out there and a person has to do what he thinks is right for himself and his family."
I wonder just how far a person can rationalize with that ethic. On one extreme, stealing food for one's family can perhaps be accepted by a society that basically wants everyone to succeed to some extent. At the other end of the moral spectrum, funding a little drug running now and then is sometimes the only thing a guy can do, just to make ends meet with the yacht payments you know.
The point is, preying on society is preying on society - period. We can excuse some things when a person is fighting for survival, but this is not survival, it's fighting for a new car because he wants a new car.
My only real objection to what you say (it's an interesting way of saying things but, yes, banks are in the business of selling money - yours and mine really) is the part about "This seems to be Mazda's motivation.I hope he has made the "right"choice. If he is wrong our system will allow him to try again-that is a good thing."
The trick here is, while it is indeed a good thing that society allows him to try again, they only give him one "mulligan" per seven years. He's cashing that one in right now and then has a seven year window during which he is, I believe the technical term is, screwed. He is very confident the new plan will work and he will take it from here. I for one hope he is right and can look at this positively years from now.
I think the message that many in here are trying to send is that they think he may be beginning to paint himself into a corner quite opposite where the door is. I hope he is right and he certainly is confident enough in his decision. I worry because I know some of the posters in here who are arguing strongly against him are quite knowledgeable in financial reality and I value their opinions.
Since the only thing that will tell the tale is time I do applaud the fact that whatever seems to be said here he keeps coming back to keep us updated and I hope he will do so either way until he has gotten completely through this or the topic gets shut down - whichever comes first.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
Well folks, I walk away for a while and you guys start talking about me.... LOL. Well I do appreciate the comments and you all have some valid points. Fezo, you have been the most fair and I appreciate that. As for knowing the next five years, you can only do your best. I have had my job for over 4 years now and would like to think that I have been some what successful in being a good employee. I wish that I could know 100% that I will have a job in the next 5 years, but who can really say that? we are at war in a unstable economy. That said, I can only try to live within reasonable means. once my bankruptcy, I have not attained any credit cards (even though I get endless pre approvals). I have also tried to plan for my future. I do plan to buy a new car because it is a necessity. I am not going out and buying a 20k or more car. That would be a foolish choice. It would also put me back in the same hole as I was in before. I am buying a car that is in the 14-16K range. I think that this is reasonable due to the fact that any decent new toyota or honda will run in this price range. Sure I could buy used but that is always a risk. As I have said before, I am planning to keep this next car till it is paid off and maybe till it falls apart. A used car maybe a good choice for some that want a certain car that they can not afford new. Like lets say you want a bmw but you just can not afford 30k car. So you go out and buy used to save the money. In my case, I am buying a basic car that prices very close to a used car of similar make and model. I am not going to save 40-60 a month and risk a lemon...that is where I stand.
I wouldn't hire anyone who had credit problems unless they had a good reason for it (not, as mazda put it, "I didn't feel like paying off the CC companies"). We run background checks (including credit checks) on everyone we hire. Looking at someone's credit gives you a pretty good look into their self-control and character, or lack thereof.
If someone doesn't think that bad credit is a big deal, they might not think it's a big deal to skip out on work, or steal from the company, either. I'm sure they could find a way to rationalize that, too.
...people with poor credit or shaky finances tend to embezzle more often from a company. Look at just about any news story of someone arrested for embezzlement or fraud. You will most likely see that said person was either greedy or had financial issues.
I'm very much a defender of those who go BK as anyone who has read through here knows.
However, I don't think buying new is a good idea unless the manufacturer has some rate subvention.
For example if you were to buy a Saturn you could get 12.9% I'm fairly sure based upon what I know.
Ford has a program for 11.9%.
I don't know what Toyota has but if they don't have a program you're going to be paying at least 19.9% if not 20+.
THATS the main reason I think you should consider a used car. I'm extremely biased but I think you should do yourself a favor and go try out the L200 Saturn. Used they make a great buy as a lightly used one can be had for around 10-11K. It has to be the most underrated car on the market. Seriously, just go drive one.
Unless you're planning on paying the car off very quickly 20% interest is a killer....
Many many people who have bad credit or BKs are NOT immoral or criminal. They just made bad choices with their money or had circumstances beyond their control force them into BK.
"Many many people who have bad credit or BKs are NOT immoral or criminal. They just made bad choices with their money or had circumstances beyond their control force them into BK." Can't argue with that. In fact, I don't think anybody has made any general statements about people who file bankruptcy. We have been commenting on mazda's specific situation.
No accusation of criminality has been made at any time. If a person's spending habits are such that he inadvertantly borrows and spends to the point where he has extreme difficulty repaying the money, he is neither immoral nor criminal, but perhaps financially inept. If he decides to solve his financial gluttony via bankruptcy rather than through hard work and self control, he risks repeating the sequence all over again by changing none of his own habits (which caused the problem BTW), making his own recovery more difficult in the long run. IMO a case can be made that he is acting imorally, since he chose an otherwise avoidable path in which some creditors will not be fully repaid at all.
To then compound that action by imediately seeking to establish more credit than he needs (i.e., a new vs. a significantly cheaper used car) he exacerbates the risk and underscores his lack of concern for his creditors. That, to me, IS imoral.
I think the point is is that there is a cost for BK...Depending on what you do and how much you owe, the cost can be tremendous. As an example, I just bought a new car...toyota camry. I was able to fiance it (with considerable down at 218 /mo. With a BK it would have been closer to 360/mo. Home mortgage....I am at 7%, 1960/mo; I know someone who just went through BK, and was able to get only 13%....his cost for my house would be $3018/mo. The difference is huge!
In fact, it is probable that my friend (who did no buy as expensive a house as mine, but instead has a comperable payment) would have been better off without BK...he was 45K in short term debt (CC).
This is not a moral argument....this is financial. BTW, I imaging with 30% down, approval would be trivial on any secured item.
"I wouldn't hire anyone who had credit problems unless they had a good reason for it (not, as mazda put it, "I didn't feel like paying off the CC companies")."
What that means is that if someone got into credit problems/BK through some strange turn of events (got fired, illness, etc.), then I wouldn't hold that against them. Even if they got into in on their own, if they at least tried to repay their creditors, I'd also give them the benefit of the doubt. But if I interviewed someone who got his/her self into trouble and made no real attempts to repay the creditors and just file BK instead, that person wouldn't be working for me. One of the things that drives people to embezzle money from their employers is living beyond their means. Obviously, someone like the person I described above has trouble living withing his or her means.
I never said that most people who file BK are immoral or criminals, they're not. But the statistics do say they're more likely to steal from the company than people who have good credit (because the people with good credit exhibit more self-control by living within their means). So if all things are equal, guess who I'm going to hire?
Perfectly valid points all around. If you read waaaaay back in this topic (I've stayed interested because of exactly the back and forth we are seeing.
Mazda did indeed get in over his head on medical issues - his dad's - and got in as some would say here pretty honestly. Do I question his getting out strategy. I'm all for buying year or two old used cars with rock solid reliability ratings. This is particularly true now because with all the new car deals the used car market is flooded and thus prices are down. GREAT deals to be had out there on perfectly fine recent vehicles that have nothing wrong with them other than a former owner with stars in their eyes.
Actually buying two year old good vehicles is my normal car buying habit. I'll admit that I bought my current two vehicles new but out of let's say over 20 cars I bought 4 new and two were dogs (the famous Windstall and an 80 VW Rabbit). Took a bath on both vehicles. I quite honestly have a better reliability record personally on used vehicles and that is without the existence of extended warranties.
We have certainly learned over the life of this topic that Mazda is going to do what he is going to do. Keep it coming and hope we stay civil enough that we get to see how it all plays out.
Please note that I just now learned that while Mazda and VW turn up as "no such word" in the spell check it recognizes Windstall as being correct. Way to go!
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
I looked back in the topic. His dad's bills only amounted to $8,000. He and his wife ran up the other $14,000 in credit card debt by putting clothes/dinners/golf/bar tabs on the CC, not to mention the car he was somehow $9,000 upside-down on, for a grand total of $31,000 ($42,000 if you count the entire balance of the car loan and not just the negative equity). Maybe he rolled negative equity when he bought that car because he had to have it? How else do you get $9k in the hole on a car that only cost in the low 20's brand new?
While his dad's situation definitely sucks, it clearly wasn't the biggest factor in his filing. His dad's debt was only 25% of the total that was discharged.
The question is not relevant to most employers or creditors. It is simply not practical for people to looking into details about the filing. So they will try to avoid BKers at all cost. It maybe unfair to someone, but life isn't fair, is it?
As for getting approval for new car. If you put down 5k and willing to pay 13% on a 2 years loan, I think that you should be able to find a bank to loan you the rest. After all, what's risk to the bank as long as they force you to insure the car. But do you have 5k and can you afford 13%? if not, probably have to wait for next life.
Glad to see that I have become so popular around here...(blush). I went to toyota today and looked at some cars. After my bk now, I have freed up a lot of cash so even with a cra note, I will still be able to save 400.00 a month. That is plenty for me. We also have to pay back some of my wives credit cards...that is not much. Everything looking good. Keep you all posted. Again, will get letter around oct 15th and will let you guys know how the car buying process went. I love all you all (even the mean ones)!
Mazda, you do recognize that you're starting right back down the path that's already burned you once, don't you? Didn't you learn anything from going through it once already?
It's like an alcoholic saying "I'll just have one beer".
Stinky - in reference to your earlier post (how Mazda ran up the debt) - you remembered the details better than I did. Point taken.
STILL gotta go for used car! Eliminate debt. Eliminate debt. I am still doing that in my own way and at my advanced own age but have two rightside up cars, a house and no bankruptcy ever. Heck, I don't think I've had a late payment in 10 years....
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
My wife and I are doing the same thing as you. I'm all about eliminating debt wherever I can. No CC debt, no Best Buy accounts. Our only debt is 2 cars and the mortgage. In the next few years, I'd like to get rid of one of the car payments, too.
Life is a lot more enjoyable when you're not stressing about how to pay your bills.
You are ahead of me on the curve largely due to credit cards that are now tucked away but I got into it honestly and will exit the same way. With all those offers on the new cards with insanely mow intro rates it is amazing how a call to your card's 800 number can reduce the rate right on down. I ended up with it all on one card with an insanely low rate good for the life of the loan. I pay the same amount every month which exceeds the minimum and will until that bugger is gone!
In 2 yeras the Accord is paid off and a couple of more (well a little less time than that) the Ody is paid off. I will drive them until they die and its specifically due to my past experience with Hondas not dying and being pretty good for what they are that I bought them.
I would very much liek to get to the long term goal of not owing anybody anything.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
find a good steady honest employee hmmm and double hmmm.I would think embezzlers would not seek bankruptcies-they have found another way of dealing with financial issues-it would seem.Lots of out and out thieves have fine credit ratings-Ken Lay for one. As far as insurance ratings go maybe people who have lots of accidents tend to be financially irresponsible also-causing them to declare BK.This seems as reasonable as BKs causing people to have accidents. Toyota is running tv ads in my area-da south-welcoming buyers with bankruptcies.An aquaintance of mine with terrible credit is now selling NEW cars,prior to this he was a collector for a large retailer. Unlike the embezzler a person who files for BK is following the law.It's not stealing.Stealing is bad no matter if it's a loaf of bread to feed your family or to buy a yacht.Once we get into making exceptions we fall into the trap of putting our moral values into the equation.Since we all have somewhat different values this can create chaos.Since the courts are supposed to reflect the will of the people(i think)at the time they were written,until they are changed the people who are declared BK are on the side of the law.Some may feel there is a "higher"law but try that argument next time you fight a speeding ticket. As it is i can charge anyone any amount of interest i want to(up to the legal limit).They can accept my rate or go elsewhere-if it is too high -they will go elsewhere. There is nothing illegal about mazda declaring BK and if I want to I can charge him a high interest rate.He will however buy at the best rate he can get.That is how it works.Also if he takes great pictures at a fair price -what do i care about his BK?
I am reminded of a guy who paid out his lease last week. Today his cheque bounced. As he wrote his cheque he said proudly, "And I didn't even have to borrow the money to write this."
My post has had to be sacrified to the gods of this board because my colorful little assistant would not show up. I regret tempting this crowd to view it.
My basic message questioned the sanity the purchase of a new car immediately following a bankruptcy. The little "smiley" basically had a two letter message which began with b and ended with s and stands for something that would not stand for very long in this or any other topic in Town Hall. The sentiment stands, however.
I am now questioning whenI go out to dinner how much of my purchase is covering for the fact that "bankrupt" diners did not pay for theirs. This is rather distressing as I really have quite enough of a problem dealing with feeding myself without feeding those who skip out on paying.
Mr. stinkypinky, while having a rather odd name and being rather abrupt, speaks a great deal of truth. Fezo seems to be a very nice man but overly generous in second chances especially considering the fact that he has stated that he does not use such a tactic.
Very interesting topic. I must go getout the check book right now and go pay my just debts.
Comments
The article went on to say that there are something like nine time more credit card solicitations sent out each year than there were 10 years ago and the requirements have gotten very low. (For example yesterday American Airlines sent me a "Gold Card" application that only requires an income of $15,000 per year)
Now back to the point: the article said that the response of the credit card companies is going to be to stop offering accounts to high risk borrowers.
Do you think that this will extend to car loans, and if so, will it increase the difficulty of recently bankrupted people in getting loans?
On one side, these folks are almost debt free and can't file bk again for 6 years, a plus.
On the other, something caused them to fall under the waves into bk.
Really depends on the reason for the bk. If something like a layoff or uninsured medical bill, this person may be a fine risk once the causative factors are permanently cleared. If the reason was impulsive spending and bad financial stewardship, the party's likely to screw up again.
Possibly some "bottom feeders" will drop out of the credit industry. I think there'll always be a second chance out there for solid people who've had some recent bad luck.
2. If you STILL think taking the so-called "easy" way out was a great idea.....
;^)
Anyway, has anybody seen SaveKaryn.com? What a brilliant idea! I don't condone her prodigality, but certainly praise her chutzpah and innovation!
I seriously doubt that Sable will run you $300 a month in repairs! I've never had an old car cost me that much, even when I amortize the purchase price into the equation. My old '79 Newport, purchased for $250.00, only ended up costing me about $100 a month total over the 2 years I had it. And that's including a rebuilt transmission! I think the worst was my '89 Gran Fury, which came out to around $150 a month.
I guess the thing that's disconcerting about his situation is why must he have a new car right after filing bankruptcy?
What's wrong with buying a nice used 2 or 3 year old vehicle and keep it up to snuff with regular maintenance. Then drive the thing for as long as possible then when he was more financially stable then possibly buy something new.
The mere fact that he could still get financing for a new car at all is frustrating to someone like me and my wife, since we both work hard and drive very used cars. We dug ourselves out of a financial hole also, it took time but it can be done.
Mazda has asked for, and been given some very good advise in this forum.
Instead of heeding this advise he will do what he has already justified in his own mind.
blazer...GOOD FOR YOU! You did the right thing!
You asked the question, now be adult enough to hear the answers.
2017 Accord Sport CVT Mod Steel Metallic
Now I'm the last guy you could accuse of such things but I do believe you are rejecting some perfectly good advice in here because you want to block out what you don't want to hear by calling it a moral judgement. It IS a moral decision whether you want to admit that or not. The morality of the lenders - and I do not deny that some credit card companies and such these days are pretty close to being loan sharks - has nothing to do with your own sense of morality. They are separate issues.
I would also say that in terms of depreciation I think you vastly underestimate the market. First, even Honda and Toyota depreciate more than what you are saying and second there are perfectly good, dependable alternatives - Nissan and Subaru sprin immediately to mind - that depreciate more quickly. The fastest depreciation hit you can possibly take is just signing your name on the deal.
That said, I do applaud pieces of your game plan. Loads of folks in your shoes run out a lease in order to reduce monthly payments which is certainly a prescription for disaster and, as lemko described, a way to get buried beyond your ability to recover.
Keep us posted and continued good luck.
The decision has already been made and he is simply seeking affirmation of that decision. He isn't getting much of it here so he's defensive. Pretty classic Psychology 101 stuff.
"I had a hard time finding actual stories on edmunds in regards to people getting approved for car loans after BK. "
Think about it. Since the banks WILL do it, maybe there aren't very many stories because it's not a good idea. It certainly puts pressure on you not to get into payment trouble again...
Here's an article you may want to read. You'll have to cut and paste the two parts of the link together as Edmunds won't permit a link of more than 115 charachters. Perhaps someone here can help with that.
Not Paying Your Bills? It Could Cost You a Job.
http://www.washingtonpost.com
/ac2/wp-dyn?pagename=article&node=&contentId=A41829-2002Jul21¬Found=true
That aside, consider a good used domestic. I highly recommend a 2000 or 2001 Chevrolet Impala. This is one car I'm confident will see you through 8 or 9 years of ownership with little trouble and will probably cost less than that new Corolla. An older Lumina might be worth considering. Sure it's not stylish but you get almost Camry-like reliability for a fraction of the price.
Getting approval for a car loan after bankruptcy sounds easy. Just looking at the screamer ads in the newspaper is enough proof. Making the payments, on such terms, is infinitely more difficult.
Potential employers do credit checks now before making employment decisions. If you screw this one up by missing some payments (which will show up on your credit history), it may be a long time before you get a decent job. I assume that you could use a better job since the one you are working now is 50 miles away and isn't paying the bills.
Our company, as well as approximately 40% of industry now use this method of screening applicants. Read the article in the Washington Post that I gave the link for. Companies use this because responsibility in paying bills is a predictor of job performance. One bankruptcy may not count against you, but a bankruptcy followed by more missed payments afterward may be viewed as a predictor that you are not a desirable employee.
This isn't intended to be mean or sarcastic. It's intended to point out that your choice of buying a new car when you may not be able to afford it may have long term consequences.
Don't fall into the trap of thinking that the bank would not lend you the money if they didn't think you can afford to make the payments. They will.
There's quite an interesting article in Wednesday's WSJ about mortgage loans... With the economy slowing, foreclosure rates are up. Many of those losing their homes are not unemployed but just have less hours of work. They were given loans by the banks that they could barely afford. When things changed they couldn't afford them.
I assume that you'll be taking a 60 month loan.
Are you confident that your income will remain stable every month for the next 5 years? That you won't incur any new currently unforeseen expenses?
Did you foresee the expenses that made you bankrupt the first time five years in advance?
An older car on a 2 year loan would be a much smarter way to go.
S
ure,people with spotty credit pay more -if-they want it.This customer is just as valuable to a company as the "good"credit customer-they pay more for the product.Most businesses have a mixed bag of customers.If only half of these customers pay you must charge them the appropriate "vig".The steady payers benifit -lower rates-and the "others"pay the price for their"sins".
I know this off topic,but it's called capitalism.There is no morality involved just a bottom line.Mazda is simply making a business decision.Whether it's a good one or not I have no way of judging.I'm sure the executives at ENRON and WORLDCOM have much better credit ratings then Mazda-would I rather have them working for me?It's a tough world out there and a person has to do what he thinks is right for himself and his family.This seems to be Mazda's motivation.I hope he has made the "right"choice.If he is wrong our system will allow him to try again-that is a good thing.Remember,debtors prisons cost money and the residents are removed from the customer base.
Car_man
Host
Smart Shoppers / FWI Message Boards
I wonder just how far a person can rationalize with that ethic. On one extreme, stealing food for one's family can perhaps be accepted by a society that basically wants everyone to succeed to some extent. At the other end of the moral spectrum, funding a little drug running now and then is sometimes the only thing a guy can do, just to make ends meet with the yacht payments you know.
The point is, preying on society is preying on society - period. We can excuse some things when a person is fighting for survival, but this is not survival, it's fighting for a new car because he wants a new car.
The trick here is, while it is indeed a good thing that society allows him to try again, they only give him one "mulligan" per seven years. He's cashing that one in right now and then has a seven year window during which he is, I believe the technical term is, screwed. He is very confident the new plan will work and he will take it from here. I for one hope he is right and can look at this positively years from now.
I think the message that many in here are trying to send is that they think he may be beginning to paint himself into a corner quite opposite where the door is. I hope he is right and he certainly is confident enough in his decision. I worry because I know some of the posters in here who are arguing strongly against him are quite knowledgeable in financial reality and I value their opinions.
Since the only thing that will tell the tale is time I do applaud the fact that whatever seems to be said here he keeps coming back to keep us updated and I hope he will do so either way until he has gotten completely through this or the topic gets shut down - whichever comes first.
I wouldn't hire anyone who had credit problems unless they had a good reason for it (not, as mazda put it, "I didn't feel like paying off the CC companies"). We run background checks (including credit checks) on everyone we hire. Looking at someone's credit gives you a pretty good look into their self-control and character, or lack thereof.
If someone doesn't think that bad credit is a big deal, they might not think it's a big deal to skip out on work, or steal from the company, either. I'm sure they could find a way to rationalize that, too.
However, I don't think buying new is a good idea unless the manufacturer has some rate subvention.
For example if you were to buy a Saturn you could get 12.9% I'm fairly sure based upon what I know.
Ford has a program for 11.9%.
I don't know what Toyota has but if they don't have a program you're going to be paying at least 19.9% if not 20+.
THATS the main reason I think you should consider a used car. I'm extremely biased but I think you should do yourself a favor and go try out the L200 Saturn. Used they make a great buy as a lightly used one can be had for around 10-11K. It has to be the most underrated car on the market. Seriously, just go drive one.
Unless you're planning on paying the car off very quickly 20% interest is a killer....
You people are amazing...
No accusation of criminality has been made at any time. If a person's spending habits are such that he inadvertantly borrows and spends to the point where he has extreme difficulty repaying the money, he is neither immoral nor criminal, but perhaps financially inept. If he decides to solve his financial gluttony via bankruptcy rather than through hard work and self control, he risks repeating the sequence all over again by changing none of his own habits (which caused the problem BTW), making his own recovery more difficult in the long run. IMO a case can be made that he is acting imorally, since he chose an otherwise avoidable path in which some creditors will not be fully repaid at all.
To then compound that action by imediately seeking to establish more credit than he needs (i.e., a new vs. a significantly cheaper used car) he exacerbates the risk and underscores his lack of concern for his creditors. That, to me, IS imoral.
In fact, it is probable that my friend (who did no buy as expensive a house as mine, but instead has a comperable payment) would have been better off without BK...he was 45K in short term debt (CC).
This is not a moral argument....this is financial. BTW, I imaging with 30% down, approval would be trivial on any secured item.
"I wouldn't hire anyone who had credit problems unless they had a good reason for it (not, as mazda put it, "I didn't feel like paying off the CC companies")."
What that means is that if someone got into credit problems/BK through some strange turn of events (got fired, illness, etc.), then I wouldn't hold that against them. Even if they got into in on their own, if they at least tried to repay their creditors, I'd also give them the benefit of the doubt. But if I interviewed someone who got his/her self into trouble and made no real attempts to repay the creditors and just file BK instead, that person wouldn't be working for me. One of the things that drives people to embezzle money from their employers is living beyond their means. Obviously, someone like the person I described above has trouble living withing his or her means.
I never said that most people who file BK are immoral or criminals, they're not. But the statistics do say they're more likely to steal from the company than people who have good credit (because the people with good credit exhibit more self-control by living within their means). So if all things are equal, guess who I'm going to hire?
Mazda did indeed get in over his head on medical issues - his dad's - and got in as some would say here pretty honestly. Do I question his getting out strategy. I'm all for buying year or two old used cars with rock solid reliability ratings. This is particularly true now because with all the new car deals the used car market is flooded and thus prices are down. GREAT deals to be had out there on perfectly fine recent vehicles that have nothing wrong with them other than a former owner with stars in their eyes.
Actually buying two year old good vehicles is my normal car buying habit. I'll admit that I bought my current two vehicles new but out of let's say over 20 cars I bought 4 new and two were dogs (the famous Windstall and an 80 VW Rabbit). Took a bath on both vehicles. I quite honestly have a better reliability record personally on used vehicles and that is without the existence of extended warranties.
We have certainly learned over the life of this topic that Mazda is going to do what he is going to do. Keep it coming and hope we stay civil enough that we get to see how it all plays out.
Please note that I just now learned that while Mazda and VW turn up as "no such word" in the spell check it recognizes Windstall as being correct. Way to go!
While his dad's situation definitely sucks, it clearly wasn't the biggest factor in his filing. His dad's debt was only 25% of the total that was discharged.
As for getting approval for new car. If you put down 5k and willing to pay 13% on a 2 years loan, I think that you should be able to find a bank to loan you the rest. After all, what's risk to the bank as long as they force you to insure the car. But do you have 5k and can you afford 13%? if not, probably have to wait for next life.
It's like an alcoholic saying "I'll just have one beer".
Stinky - in reference to your earlier post (how Mazda ran up the debt) - you remembered the details better than I did. Point taken.
STILL gotta go for used car! Eliminate debt. Eliminate debt. I am still doing that in my own way and at my advanced own age but have two rightside up cars, a house and no bankruptcy ever. Heck, I don't think I've had a late payment in 10 years....
Life is a lot more enjoyable when you're not stressing about how to pay your bills.
In 2 yeras the Accord is paid off and a couple of more (well a little less time than that) the Ody is paid off. I will drive them until they die and its specifically due to my past experience with Hondas not dying and being pretty good for what they are that I bought them.
I would very much liek to get to the long term goal of not owing anybody anything.
As far as insurance ratings go maybe people who have lots of accidents tend to be financially irresponsible also-causing them to declare BK.This seems as reasonable as BKs causing people to have accidents.
Toyota is running tv ads in my area-da south-welcoming buyers with bankruptcies.An aquaintance of mine with terrible credit is now selling NEW cars,prior to this he was a collector for a large retailer.
Unlike the embezzler a person who files for BK is following the law.It's not stealing.Stealing is bad no matter if it's a loaf of bread to feed your family or to buy a yacht.Once we get into making exceptions we fall into the trap of putting our moral values into the equation.Since we all have somewhat different values this can create chaos.Since the courts are supposed to reflect the will of the people(i think)at the time they were written,until they are changed the people who are declared BK are on the side of the law.Some may feel there is a "higher"law but try that argument next time you fight a speeding ticket.
As it is i can charge anyone any amount of interest i want to(up to the legal limit).They can accept my rate or go elsewhere-if it is too high -they will go elsewhere.
There is nothing illegal about mazda declaring BK and if I want to I can charge him a high interest rate.He will however buy at the best rate he can get.That is how it works.Also if he takes great pictures at a fair price -what do i care about his BK?
I'm thinking now he should've.
I never said they WOULD steal, I said the statistics say they are MORE LIKELY to steal. I stand by that comment.
My basic message questioned the sanity the purchase of a new car immediately following a bankruptcy. The little "smiley" basically had a two letter message which began with b and ended with s and stands for something that would not stand for very long in this or any other topic in Town Hall. The sentiment stands, however.
I am now questioning whenI go out to dinner how much of my purchase is covering for the fact that "bankrupt" diners did not pay for theirs. This is rather distressing as I really have quite enough of a problem dealing with feeding myself without feeding those who skip out on paying.
Mr. stinkypinky, while having a rather odd name and being rather abrupt, speaks a great deal of truth. Fezo seems to be a very nice man but overly generous in second chances especially considering the fact that he has stated that he does not use such a tactic.
Very interesting topic. I must go getout the check book right now and go pay my just debts.