There is one caveat to this, as I understand - if you take out another loan (like a home eq loan) in order to pay off other debts (especially credit card), it may indicate that you got in over your head credit-wise and had to bail yourself out. This is probably not a big deal if you do it once, but if it looks like this is a pattern, it may hurt you.
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That's just like transferring everything to a zero percent balance account. It's good for your bottom line, but if you go above 80% of the credit limit on any card, you'll get Zapped :surprise:
So, I called the bank on the card that i "selected" for this "honor" and had them increase the credit limit, so I would be under the 80% mark after the balance transfer
My fiancee and I just returned from car shopping. He wants to finance a 2005 Acura RSX S. We have figured out monthly expenses and determined that we can afford around 300$ a month for the car. He travels and easily puts about 30,000 miles on his car in a year so leasing is out of the question. But he would like to buy it and trade it up every few years. My question is if this is a bad trend to get into? It seems sensible to us for him to buy the car and we make the car payments every month with no intention of paying it off before trading it in. However, we are looking for advice as to if this is an unforeseen disastor. He graduated college about a year ago and I still have a year to go. We do not have much credit, but he has a steady income, our hope is to build credit through financing a vehicle in order to have enough credit to buy a house in 2 or so years. Although we dont have much credit, what we have is good. Any suggestions or advice on our scenario?
Stop focusing on the credit and focus on how much of his hard-earned money he will be putting out in car payments in the next few years if he decides it's OK to be a perpetual financer. 300/mo over 60 months is 18 thousand dollars by itself, and if you trade it before it's paid off, roll over some negative equity, etc..., you could be spending 25-30K or more on vehuicle debt over the next 5-6 years. You really want a house in 2 years that badly? Buy the best used car you can get for cash or financed for no more than 3 yrs. Then put those big new car payments into your house fund. Is accepting perpetual car payments a potential financial disaster? I believe so. Go to a retirement calculator some place like bank-rate.com, plug in 300 dollars per month over 20 yrs, 30 yrs, etc... and see how rich that car payment money could be making you if it wasnt paying off a vehicle. Having good credit is nice and definitely important, but it's only an effective tool if you accumulate lots of cash to go along with it and minimize the amount of interest you pay for consumer goods. Paying a ton of interest in order to get a good credit score that will allow you to pay less interest is kind of...defeating the purpose of trying to maximize the credit score. Concentrate on paying credit cards off in full every month instead.
Once my Dodge Dakota is paid off will be keeping it a few more years and diverting those car payments directly to savings and investments. I look forward to using it to make me rich for awhile instead of helping make a finance company richer.
It might lower your score, but you will be much better off. Believe me, debt-free individuals with good credit history and good incomes can always get financed, if they need it..
And, usually end up much wealthier in the long run...
Paying off debt and closing credit lines is a net positive, no matter how you figure it.
one big measure of credit scoring is the spread between debt and available credit. as Tenexe mentioned, closing accounts can have a big negative impact on the credit score. of course if you can't be trusted to have credit cards then eliminating them may be more important step to financial security.
kyfdx...I agree in theory with your post but those who can manage their credit are often better off wiping out the debt but keep open the lines of credit.
I don't know about that... while keeping a credit line open would help to achieve the national average of available balance vs available credit (34%), having an unused open credit line increases the risk for a potential lender.
In the lender's point of view, once you get the credit you are applying for, you might also max out your other available lines, so, yes, IMHO, it might hurt you, not in the credit score per se, but in the internal score that the lender might calculate to determine rates and conditions.
What's this, "available balance" is a non-term to me. You have a "balance" and a "credit limit". "Available credit" is the difference b/w credit limit and balance".
Are you trying to say that the national average of available credit to credit limit is 34%, meaning that on a $10,000.000 limit card the average balance is $6,600.00 with $3,400.00 credit "available"?? or is it the other way around.
If I had 64% of $120,000.00 total limits charged up, I could never make the payments :surprise:
just to clarify...my post had nothing to do with national avg...but individual credit scores and the mystery as to how scores are determined.
on the credit bureau there is a line called available credit. let's say you have a total limits on all your credit of $10,000 and you have $6000 in debt...so your available credit is $4000. if you had $10K in credit limits and $0 debt, your available credit is $10K. The second scenerio would produce a much higher credit score...available credit represents 30% of the credit score.
True, this will not affect how the score is calculated, but it will affect the risk that the lender calculates to determine the interest rate to offer.
Let me explain what I mean with "national average"...
Following the above example, on a credit limit on all your revolving accounts of $10k with $6k in debt, the % of debt to credit limit is 60%, which is much higher than the national average of 34%, and this will greatly impact the score, since as audia8q says, it represents 30% of it.
Actually, I just pulled by credit report, and this 34% is now around 40%, reflecting the fact that consumers are using more revolving debt than before.
Is it OK to apply for financing with bad marks on report? I'm not sure exactly what my FICO score is, I have 2 places that specify "FICO Score" and one says 667, another says 722.. So whatever.. :confuse: I pulled all 3 of my credit reports and there is only 1 bad mark on 2 reports and it is a mistake. Apparently on a credit forum I belong to it's a common problem. The reports say "120 days past due" even though there is a 0 balance... That card that it's saying is 120days past due has been closed by me since 2001. I do plan to fight that mark, but I'm sure it'll take a couple of months to come off and I really can't wait untill that's gone off my report untill I try and get a car...
There isn't anything else bad on my credit reports. My revolving balances are under $500 and my total credit limit for all my cards is over $7,000..
So where should I apply for financing with that kind of mark? $15,000. Do you think this mark on my report will hurt that much? Any other opinions?
I need some advice on a loan that I recently took to purchase a new car. On April 10th, I was quoted a rate of 5.74% for six years which I took through AAA financial services. I signed the loan agreement which verified this rate and picked up the check to give to the dealer. Last week, AAA called me and stated that a mistake was made on the rate I was quoted. I was quoted the rate for a tier 1 credit score at 5.74% but I qualified at tier two for 6.64% for six years. They now want to change the rate after I have signed the loan agreement, they are now offering me 5.64% for 66 months which would increase my payment by $30 a month. They are trying to justify this by saying that I will save $500 over the life of the loan.
Since I have the signed loan agreement with the original rate of 5.74% and have yet to make a payment, do they have the right to change the rate of the loan after the fact?
Hey everyone! Just wondering what credit score Chrysler Financial required, and how their tiers break down. I currently have a FICO of 620, and a 19% interest loan on a Cavalier, through Capital One. I want to trade it in on a Wrangler when I hit the break even point, and wondered how feasible that would be. I plan to pay off some credit card balances, which should raise it. The simulator said this might even raise it to 700, but I'm not sure how accurate that is! And I'm not complaining about the interest rate cause getting that loan was a lifesaver, and has raised my score ALOT! I would just like to trade for something that holds its value better, and a lower interest rate. Any help would be appreciated! Hugs, Chevy Girl
Hi chevygirl, I am not sure what Chrysler's tier requirements are, but you are certainly moving in the right direction with your attitude. Paying off credit card balances is a VERY good plan. I suggest doing that as soon as you possibly can, then have a look at your credit score. If you have a lot of revolving credit and you pay it down, you will see a very good rise in your credit score (plus continuing to pay on the Cavalier loan on time).
Between writing out those checks , hop on over to our Real-World Trade-In Values discussion and post details about your Cavalier to find out approximately what it's worth right now. If you are at the break even point and you get that credit score up, you can shop for your next vehicle.
Remember that a vehicle is NOT an investment. If you plan to keep your next vehicle, Wrangler or whatever else, until it is paid for, then you'll be in a much better position when you go to trade in.
Visit our Jeep Wrangler page, select the style that you're most interested in, then hit the reviews & specifications tab. On that page, you'll find links to resale values, and True Cost to Own. Hopefully, those will help you decide.
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...before it's paid for. This will guarantee you won't be upside-down when you buy your next vehicle. I know a girl who traded several cars with balances on them in a row. She is so buried, she will need to dig upwards to see the devil.
Thanks for your words of wisdom! I don't owe a lot on credit cards, around 1,500 or so, but my balances are more than thirty percent of my credit limit. I plan to pay that almost entirely off in the next two months. I did not know how much that affected my score! I do not plan at all to bury negative equity in the Wrangler. I would only trade up if I could get more than or at least equal to what I owe. Heck, I might even stay in the Cavalier (Awesome gas mileage!) if I can refinance it at a lower rate in a few months. I just don't think I can even do that when I owe more than it's worth, and until my scores improve. Guess I'm still considering all my options! And thanks again for all your help, this board is amazing! ChevyGirl
Hi chevygirl. I did a little research about your situation for you and here's what I came up with. Chrysler Financial has special financing rates for consumers who do not qualify for its top credit tier, but unfortunately not on the 2005 Jeep Wrangler. For example, consumers who qualify for its B through B plus credit tiers can finance a 2005 Jeep Liberty at 0.9% for up to 5 years and consumers who qualify for its B minus through C credit tiers can finance it at 4.9% for 60 months. Its special rates for consumers who don't qualify for its top credit tier vary by model.
Hi, everyone! Thanks so much for your help! I have decided to stick with the Chevy for the forseeable future and refinance it at a lower rate. I am currently in the process for that and should be finishing it up tomorrow, and finding out what rate I will get. I am thinking I should qualify for a much lower rate. With that in mind, I have (pretty much) decided to stick it out with the Chevy, and pay it off. At a lower interest rate, $7999 should pay off pretty quick. But, as a woman, I reserve the right to change my mind! So, Car_man, how did you get your info? And maybe I should test drive a Liberty, those rates are pretty low... hmmmm! Thanks, Chevy Girl
My question is I am trying to get approved for a new car loan for my wife who cannot apply herself because she is about to file bankruptcy. The trouble is my credit is very poor around 600 score and I already have a car loan on my car. Every car dealership I have gone to tells me I can get approved for the loan only if I trade in my car which I don't want to do because the new car is not for me its for my wife. When I tell them that they say I will need a co-signer then to explain why I need 2 car loans. I don't have anyone that can co-sign for me. Is there anything else I can do? Would a credit union be able to help me? What do you suggest?
I would recommend looking at a credit union. Maybe try applying online with Capital One. You are in a tough spot as most banks that deal with challenged credit will only allow one car loan at a time. Sorry I can't give you any definite answers, but your are between the proverbial rock and hard place.
1. Why are you trying to get a new car when your wife is filing for bankruptcy?
2. Your credit is awful and your wife's will soon be awful. Why do you need a new car?
You and your wife have bad (or soon to be bad) credit for a reason. Whether the reason is because of something in your control or not, you didn't say. Not that it really matters.
My credit about 3.5 years ago was in the low 600s because I wasn't paying off my student loan. I bootstrapped my credit off my wife after we got married, but the principle is still the same. Pay off your current debts regularly (car, credit card, whatever). Wait for a year or two or three until your credit is 700+. Then get a new car.
I can't understand why you want $25000 in more debt when your wife is filing bankruptcy. Get a cheap used car. Your interest rate will be awful, so try to minimize the damage.
My wife and I bought a Kia Sephia for $5500 in 2002. After paying bills down (my wife's credit was always good but she had lots of debt. I had no debt aside from the student loan and awful credit) she bought a new 2003 Beetle a year later. Three months ago I bought a new 2005 Mazda 3 at 2.9% interest through my credit union. The wait to build our credit was VERY worth it.
A draconian new bankruptcy law is going into place in October. It will be more difficult to file Chapter 7 bankruptcy which wipes the slate clean and subjects more debtors to Chapter 13 per a means test. You will also be compelled to go to debt counseling before your obligations are discharged. If I had to file, I'd do it now!
...**A Draconian new bankruptcy law is going into place** ....
That's the best description yet....!
As far as your wifes BK is concerned (and not having your credit report in front of me) ... you have to be Veeeeery careful that you don't have her name on any of the credit cards, lines of credit, the house mortgage and/or any cars .... if so, it can all bounce back and reflect in your bureau, or at least, the creditors will close your accounts and you will have no further credit available ..... this is one of those "sticky wicked" things and you have to be careful .....
Anyway .... don't tell the lenders about the wife and get the new vehicle without the drama story, and keep it conservative .....
A new mortgage will typically lower your credit score a bit, but if your credit is as good as you say, and your debt is in line you shouldn't have a problem.
My understanding of the new Bankruptcy law (I am not a lawyer, etc):
Right now, you decide if you want to file Ch. 7 (clean slate) or Ch. 13 (reorganize debts). When the new law goes into effect on Oct. 17, anyone with an income under the state median can still choose. But if you have an income at the state median or above, the court calculates what your allowable expenses are, and if they determine you have $100 or more a month that you can use to repay debts, you MUST file ch. 13. Oh, and they use IRS guidelines as to what your expenses SHOULD be. It doesn't matter what expenses you actually have.
Also, if you have a vehicle you want to keep you will need to pay the full amount still owed on your loan, not the current vehicle value as is currently done. So basically you can no longer use Ch. 13 to get "right side up" on a car. Of course, you'll probably be unable to get another loan at a decent rate once you've filed. A lot of people are going to be riding the SLE (shoe leather express) due to this little provision.
Who thinks people should repay money that they owe rather than have a "slate wiped clean"?
I'm not being cold hearted toward people who through bad luck, illness or misfortune are forced into bankruptacy. I just happen to think it should be used as more of a LAST RESORT instead of a casual "thing to do".
This isn't so much about paying back vs. not paying back. The idea is that if you can't pay back, you can have antoher chance. Sure some people abuse it, and others don't get to take advantage of it when they should be able to. But on the whole, it wasn't so bad.
It's like medical bills. It's not a matter of whether you get treatment or not: When it's an acute illness, you'll go from the emergency room to the operating table in 30 minutes flat, and they'll worry about payment later. AFAIK, that's the law.
It's not a matter of whether you'll pay or not: Most people with insurance will be able to pay, and those without won't. Especially because those without insurance are subject to a system that charges them more, a *lot* more, than those who buy healthcare through their employer's insurance plan.
It's just a matter of whose life is wrecked -- or saved -- or both -- during the process.
Just like bankruptcy. It's not so clear how people who have their back against the wall and no credit will be able to scrape up $2k for their BK attorney. Many of them will not even attempt to file because of that. So they're screwed indefinitely.
But it doesn't mean they'll pay their bills. It just means they won't get back on their feet. So, to answer your question: Yes, I do think people should repay money they owe, but in many cases, it ain't gonna happen, no matter what the BK laws.
But it seems that the incentive to exercise due diligence on the part of lenders -- automotive or otherwise -- is about to diminish greatly. And I happen to think that the lenders are just as much to blame for people getting in over their head as the consumers themselves. Heaven knows I wouldn't lend $24k on a new Chevy Impala...
"How do they know I don't already have five cards maxed out? " They do know. Check your credit report and see who's been sniffing around in it. It's impressive. For starters, all those sleazeballs sending you applications.
At 23% interest, they just need you making the minimum payments for 4 years to break even. Anything after that is pure gravy.
Where I come from, we have a word for it: Wucher. The English word is "usury". Somehow, it doesn't apply to 20+ percent interest rates, except in a few states. It's no wonder it's big business.
To sorta stay on topic: The companies I bought new cars from recently also have a tendency to show up on my credit report. Nosy little buggers...
"[..] nobody holds a gun to the heads of the people who jump on these either." We have a multi-billion (trillion?) dollar-a-year industry holding TV sets to people's heads to make them do all sorts of dumb things. Buy cars they don't need, eat food that's bad for them, you name it. This stuff is very, very powerful, and well researched. A lot of people lack the tools to withstand that pressure.
"It's like medical bills. It's not a matter of whether you get treatment or not: When it's an acute illness, you'll go from the emergency room to the operating table in 30 minutes flat, and they'll worry about payment later."
.......... The reason why I have a problem with the new law is .... it's structured to cover and protect MBNA and the rest of the "credit cards" companies - only ...
Mr. Lerner obviously had the connections and the horsepower to get this through ... gheeeeez, they've only made 120% on their investments in the last 4 years and they have had record profits for the last 7 .... all lenders, whether it be Wachovia, Suntrust, Bank of America, Wells Fargo, whatever, have always structured their financial portfolio for a 3 to 5% loss - all lenders do it, it's been that way since 1984, and for some, alot longer than that .. it's used to cover the car repo's, the room addition that went bad, the couch that the guy couldn't pay for, foreclosure's, or that $1,500 credit card --- business as usual ......
Of course, you're always going to get the folks that are just plain stupid with money or just super irresponsible and they take advantage of the system, and he's usually the guy that shoplifts at K-Mart, cheats at poker, spends too much time in Vegas and punches his time card for more hours than he works, so there is the 1% or less, plus these types need to be AA NA and GA ..l.o.l....
Then you have folks that had their business blown down during hurricanes, or maybe their house was flooded in the Midwest or in the Mississippi region and they've been laid off for 10/15 months, and lets not forget the guy that had a bad car accident, or maybe a stroke at 38, maybe his wife gets Cancer and is on Chemo for the next 9 months, or maybe just a plain old divorce (that most attorneys will end-up killing someones credit with, cuz' they know nothing about credit, but a whole bunch about divorce) ..... It's all very sad and unfortunate, and it happens everyday, but they are part of that "acurarial" 3 to 5% ...... Now, these poor folks have little or no options ..
The new law is really a Chapter 13 (for all intensive purposes) .. Not a 7, and these folks are made to pay-off their credit cards and sit with a trustee that makes-up their minds for them, this way MBNA doesn't lose anything .....
Here's a crazy thought ~ how about not sending 1.2 million credit cards to my daughters (or anyones) while they're in High school or College, especially since they were under age .. how about not sending 2 and 3 new credit cards a month to folks that can't even pay their JC Penny's card, or how about not giving 0% when the credit card companies know that 85% will roll them over and see $20%+ after the end date .. how about not giving 18 months "same as cash" when the lenders know that 71% will take that $126.89 payment for the next 20 months at 28% ....
Believe me, I'm a Firm believer of the word responsibility - "and what it means" (too a fault) ... but kicking someone when their down is low, reeeeal low .. it's okay to give the Tsunami victims billions of dollars - but God forbid the little lady down the street gets Lymphoblastic Leukemia and can't work .. so now, we take her car away and drag her around the courts to pay-off her Visa or Mastercard...??
I understand your interest in this new law, as it seems to have everyone talking. However, this is an automotive message board, so let's not focus on credit card companies and what you, personally, think about consumer vs. corporate responsibility. If you want to talk about this new law, let's keep it focused on how it will affect the automotive industry. Thanks.
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It changes the way car debt gets handled in a Ch. 13. Currently it is much easier to keep a car you're upside down in, but when the new law goes into effect you will need to pay the full amount of the loan to keep the car.
My main problem with the law is that it uses IRS expense guidelines to determine how much your expenses should be, not actual expenses. Have 3 boys playing high school football who eat like horses? Sorry, your allowable food expense is only X. Have a 63 mile one way commute because that was the only neighborhood you could afford? Sorry, your IRS approved travel expense is only Y. Okay, looks like according to the IRS you can afford to pay Z towards your debt load every month, so you get to file Ch. 13, and pay Z per month towards your debt load. Never mind that when all is said and done Z is really Z - 300, or something like that.
Here's another dirty little secret - from a credit rebuilding perspective, Ch. 13 is WORSE than Ch. 7. A BK stays on your report for 7 years from the time it's discharged, not the time you file. A Ch. 7 is discharged almost immediately when you file, while a ch. 13 doesn't get discharged until the repayment plan is complete. So that means it could stay on your record for 10-12 years or more!
I'm all for personal responsibility, but Terry's right - the new law isn't about encouraging personal responsibility, it's about padding the bottom line of the CC companies.
-Jason
ps. I've never declared BK, and never plan to. No car or CC debt. But I've got plenty of family that are / have been in tight financial spots, due to job loss or medical bills or their own shortsightedness.
I guess I get jaded. I feel for those who have had a run of just plain bad luck and I know I need to be thankful I've been (so far) spared from this.
The ones who bother me are the people who bring this on themselves. I see it all of the time. I try my best to steer these people toward a car that is more affordable and practical but, noooooo. They HAVE to have the top of the line model etc...
I guess I should go back and read more about the proposed changes before I spout off on it.
... **Here's another dirty little secret - from a credit rebuilding perspective, Ch. 13 is WORSE than Ch. 7. A BK stays on your report for 7 years from the time it's discharged, not the time you file. A Ch. 7 is discharged almost immediately when you file, while a ch. 13 doesn't get discharged until the repayment plan is complete. So that means it could stay on your record for 10-12 years or more!** ...
Hi, again! Just a quick update from Chevy Girl! Still trying to refi my cavvy. I have been making monster payments, and am not in the hole. I still owe more than trade in value, but I owe less than retail value, so that's something! I sent off big fat credit card payments and am trying to resist temptation to shop with them. So far, so good! Thanks again for your kind words, and when I finish the refi, I will post how that all went down. Of course, if it does not happen soon, I will prob. owe too little to refi! Oh well! Even with out refi, I can see having this car paid off in a year and a half. One of the perks of buying LESS than you can afford!
Chevygirl, you are ONE smart gal! We sure enjoy hearing stories about members who are committed to improving their credit and trade/purchasing position. So many folks are looking for a magic "quick fix," but you're doing it the right way - paying off what you owe and waiting til you're in the right position to trade vehicles. Can't wait to hear about your re-fi and hopefully, in a year or two, your shopping experience.
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I have one suggestion (based on my experience), which might be debatable. 6 month ago I had about $9K loan to pay for my Honda CR-V for 6.25 %. I was planning to pay off this balance in a year. I got an offer from credit card a 0% for year for transferring balances, so I transferred my whole balance to this credit card. I divided the $9K for 12 month and I am sending that payment every month. I know it requires to open ANOTHER credit card, but if you are committed to pay off your car loan in a year and financially responsible (from your posts it seems like you are) this could be a good suggestion. At least it works for me. My money is in the bank earning interest and I don't have to pay interest at all for the car. Plus I was able to bring my insurance cost down, since it requires setting higher collision limits if your car is financed or leased. I already got the title from Honda and since my car is considered "paid in full" I'm paying less for my car insurance compare to what I paid when it was financed.
I have agreed to buy this vehicle!! Went into Infiniti and because my credit is good, but not well established, they would not lease me a vehicle. However they would finance me at a higher interest rate. The vehicle is an fx45 with all the trimmings - 2003 model 28,000 miles on it. They are financing it to me with 8% interest. my payments come to $472/72 months with $10,000 down. I want this vehicle!! I drive about 65 miles a week (If that, because it is usually to and from the airport). If I financed a new one it would be very high because of the cost of the vehicle ($41,939), comes to about $780/month - way too much!! Any suggestions??
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So, I called the bank on the card that i "selected" for this "honor" and had them increase the credit limit, so I would be under the 80% mark after the balance transfer
Stop focusing on the credit and focus on how much of his hard-earned money he will be putting out in car payments in the next few years if he decides it's OK to be a perpetual financer. 300/mo over 60 months is 18 thousand dollars by itself, and if you trade it before it's paid off, roll over some negative equity, etc..., you could be spending 25-30K or more on vehuicle debt over the next 5-6 years. You really want a house in 2 years that badly? Buy the best used car you can get for cash or financed for no more than 3 yrs. Then put those big new car payments into your house fund. Is accepting perpetual car payments a potential financial disaster? I believe so. Go to a retirement calculator some place like bank-rate.com, plug in 300 dollars per month over 20 yrs, 30 yrs, etc... and see how rich that car payment money could be making you if it wasnt paying off a vehicle. Having good credit is nice and definitely important, but it's only an effective tool if you accumulate lots of cash to go along with it and minimize the amount of interest you pay for consumer goods. Paying a ton of interest in order to get a good credit score that will allow you to pay less interest is kind of...defeating the purpose of trying to maximize the credit score. Concentrate on paying credit cards off in full every month instead.
Once my Dodge Dakota is paid off will be keeping it a few more years and diverting those car payments directly to savings and investments. I look forward to using it to make me rich for awhile instead of helping make a finance company richer.
And, usually end up much wealthier in the long run...
Paying off debt and closing credit lines is a net positive, no matter how you figure it.
regards,
kyfdx
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kyfdx...I agree in theory with your post but those who can manage their credit are often better off wiping out the debt but keep open the lines of credit.
In the lender's point of view, once you get the credit you are applying for, you might also max out your other available lines, so, yes, IMHO, it might hurt you, not in the credit score per se, but in the internal score that the lender might calculate to determine rates and conditions.
Are you trying to say that the national average of available credit to credit limit is 34%, meaning that on a $10,000.000 limit card the average balance is $6,600.00 with $3,400.00 credit "available"?? or is it the other way around.
If I had 64% of $120,000.00 total limits charged up, I could never make the payments :surprise:
on the credit bureau there is a line called available credit.
let's say you have a total limits on all your credit of $10,000 and you have $6000 in debt...so your available credit is $4000. if you had $10K in credit limits and $0 debt, your available credit is $10K. The second scenerio would produce a much higher credit score...available credit represents 30% of the credit score.
Following the above example, on a credit limit on all your revolving accounts of $10k with $6k in debt, the % of debt to credit limit is 60%, which is much higher than the national average of 34%, and this will greatly impact the score, since as audia8q says, it represents 30% of it.
Actually, I just pulled by credit report, and this 34% is now around 40%, reflecting the fact that consumers are using more revolving debt than before.
There isn't anything else bad on my credit reports. My revolving balances are under $500 and my total credit limit for all my cards is over $7,000..
So where should I apply for financing with that kind of mark? $15,000.
Do you think this mark on my report will hurt that much?
Any other opinions?
Since I have the signed loan agreement with the original rate of 5.74% and have yet to make a payment, do they have the right to change the rate of the loan after the fact?
Vtcar
Any help would be appreciated!
Hugs, Chevy Girl
If your Cavalier has already depreciated a lot, then it may not depreciate much more.
My guess is that you should keep the Cavalier and pay off ALL of your credit cards.
I am not sure what Chrysler's tier requirements are, but you are certainly moving in the right direction with your attitude. Paying off credit card balances is a VERY good plan. I suggest doing that as soon as you possibly can, then have a look at your credit score. If you have a lot of revolving credit and you pay it down, you will see a very good rise in your credit score (plus continuing to pay on the Cavalier loan on time).
Between writing out those checks
Remember that a vehicle is NOT an investment. If you plan to keep your next vehicle, Wrangler or whatever else, until it is paid for, then you'll be in a much better position when you go to trade in.
Visit our Jeep Wrangler page, select the style that you're most interested in, then hit the reviews & specifications tab. On that page, you'll find links to resale values, and True Cost to Own. Hopefully, those will help you decide.
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ChevyGirl
LOL, that's the best phrase I've ever heard!! That's about where I am with my Titan.
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Thanks,
Chevy Girl
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2. Your credit is awful and your wife's will soon be awful. Why do you need a new car?
You and your wife have bad (or soon to be bad) credit for a reason. Whether the reason is because of something in your control or not, you didn't say. Not that it really matters.
My credit about 3.5 years ago was in the low 600s because I wasn't paying off my student loan. I bootstrapped my credit off my wife after we got married, but the principle is still the same. Pay off your current debts regularly (car, credit card, whatever). Wait for a year or two or three until your credit is 700+. Then get a new car.
I can't understand why you want $25000 in more debt when your wife is filing bankruptcy. Get a cheap used car. Your interest rate will be awful, so try to minimize the damage.
My wife and I bought a Kia Sephia for $5500 in 2002. After paying bills down (my wife's credit was always good but she had lots of debt. I had no debt aside from the student loan and awful credit) she bought a new 2003 Beetle a year later. Three months ago I bought a new 2005 Mazda 3 at 2.9% interest through my credit union. The wait to build our credit was VERY worth it.
Jason
That's the best description yet....!
As far as your wifes BK is concerned (and not having your credit report in front of me) ... you have to be Veeeeery careful that you don't have her name on any of the credit cards, lines of credit, the house mortgage and/or any cars .... if so, it can all bounce back and reflect in your bureau, or at least, the creditors will close your accounts and you will have no further credit available ..... this is one of those "sticky wicked" things and you have to be careful .....
Anyway .... don't tell the lenders about the wife and get the new vehicle without the drama story, and keep it conservative .....
Terry.
Right now, you decide if you want to file Ch. 7 (clean slate) or Ch. 13 (reorganize debts). When the new law goes into effect on Oct. 17, anyone with an income under the state median can still choose. But if you have an income at the state median or above, the court calculates what your allowable expenses are, and if they determine you have $100 or more a month that you can use to repay debts, you MUST file ch. 13. Oh, and they use IRS guidelines as to what your expenses SHOULD be. It doesn't matter what expenses you actually have.
Also, if you have a vehicle you want to keep you will need to pay the full amount still owed on your loan, not the current vehicle value as is currently done. So basically you can no longer use Ch. 13 to get "right side up" on a car. Of course, you'll probably be unable to get another loan at a decent rate once you've filed. A lot of people are going to be riding the SLE (shoe leather express) due to this little provision.
Here's a good summary: http://tinyurl.com/72ks7
-Jason
I'm not being cold hearted toward people who through bad luck, illness or misfortune are forced into bankruptacy. I just happen to think it should be used as more of a LAST RESORT instead of a casual "thing to do".
Having said that, I would like to see a lot tighter credit restrictions by lenders on those deemed to be serious credit risks or without credit.
Twenty five years ago, it was pretty tough to get credit and you had to build up a reputation. Now they'll lend anyone money ...
This isn't so much about paying back vs. not paying back. The idea is that if you can't pay back, you can have antoher chance. Sure some people abuse it, and others don't get to take advantage of it when they should be able to. But on the whole, it wasn't so bad.
It's like medical bills. It's not a matter of whether you get treatment or not: When it's an acute illness, you'll go from the emergency room to the operating table in 30 minutes flat, and they'll worry about payment later. AFAIK, that's the law.
It's not a matter of whether you'll pay or not: Most people with insurance will be able to pay, and those without won't. Especially because those without insurance are subject to a system that charges them more, a *lot* more, than those who buy healthcare through their employer's insurance plan.
It's just a matter of whose life is wrecked -- or saved -- or both -- during the process.
Just like bankruptcy. It's not so clear how people who have their back against the wall and no credit will be able to scrape up $2k for their BK attorney. Many of them will not even attempt to file because of that. So they're screwed indefinitely.
But it doesn't mean they'll pay their bills. It just means they won't get back on their feet. So, to answer your question: Yes, I do think people should repay money they owe, but in many cases, it ain't gonna happen, no matter what the BK laws.
But it seems that the incentive to exercise due diligence on the part of lenders -- automotive or otherwise -- is about to diminish greatly. And I happen to think that the lenders are just as much to blame for people getting in over their head as the consumers themselves. Heaven knows I wouldn't lend $24k on a new Chevy Impala...
-Mathias
How do they know I don't already have five cards maxed out?
Of course, nobody holds a gun to the heads of the people who jump on these either.
They do know. Check your credit report and see who's been sniffing around in it. It's impressive.
For starters, all those sleazeballs sending you applications.
At 23% interest, they just need you making the minimum payments for 4 years to break even. Anything after that is pure gravy.
Where I come from, we have a word for it: Wucher. The English word is "usury". Somehow, it doesn't apply to 20+ percent interest rates, except in a few states. It's no wonder it's big business.
To sorta stay on topic: The companies I bought new cars from recently also have a tendency to show up on my credit report. Nosy little buggers...
"[..] nobody holds a gun to the heads of the people who jump on these either."
We have a multi-billion (trillion?) dollar-a-year industry holding TV sets to people's heads to make them do all sorts of dumb things. Buy cars they don't need, eat food that's bad for them, you name it. This stuff is very, very powerful, and well researched. A lot of people lack the tools to withstand that pressure.
-Mathias
Exactly! :sick:
Mr. Lerner obviously had the connections and the horsepower to get this through ... gheeeeez, they've only made 120% on their investments in the last 4 years and they have had record profits for the last 7 .... all lenders, whether it be Wachovia, Suntrust, Bank of America, Wells Fargo, whatever, have always structured their financial portfolio for a 3 to 5% loss - all lenders do it, it's been that way since 1984, and for some, alot longer than that .. it's used to cover the car repo's, the room addition that went bad, the couch that the guy couldn't pay for, foreclosure's, or that $1,500 credit card --- business as usual ......
Of course, you're always going to get the folks that are just plain stupid with money or just super irresponsible and they take advantage of the system, and he's usually the guy that shoplifts at K-Mart, cheats at poker, spends too much time in Vegas and punches his time card for more hours than he works, so there is the 1% or less, plus these types need to be AA NA and GA ..l.o.l....
Then you have folks that had their business blown down during hurricanes, or maybe their house was flooded in the Midwest or in the Mississippi region and they've been laid off for 10/15 months, and lets not forget the guy that had a bad car accident, or maybe a stroke at 38, maybe his wife gets Cancer and is on Chemo for the next 9 months, or maybe just a plain old divorce (that most attorneys will end-up killing someones credit with, cuz' they know nothing about credit, but a whole bunch about divorce) ..... It's all very sad and unfortunate, and it happens everyday, but they are part of that "acurarial" 3 to 5% ...... Now, these poor folks have little or no options ..
The new law is really a Chapter 13 (for all intensive purposes) .. Not a 7, and these folks are made to pay-off their credit cards and sit with a trustee that makes-up their minds for them, this way MBNA doesn't lose anything .....
Here's a crazy thought ~ how about not sending 1.2 million credit cards to my daughters (or anyones) while they're in High school or College, especially since they were under age .. how about not sending 2 and 3 new credit cards a month to folks that can't even pay their JC Penny's card, or how about not giving 0% when the credit card companies know that 85% will roll them over and see $20%+ after the end date .. how about not giving 18 months "same as cash" when the lenders know that 71% will take that $126.89 payment for the next 20 months at 28% ....
Believe me, I'm a Firm believer of the word responsibility - "and what it means" (too a fault) ... but kicking someone when their down is low, reeeeal low .. it's okay to give the Tsunami victims billions of dollars - but God forbid the little lady down the street gets Lymphoblastic Leukemia and can't work .. so now, we take her car away and drag her around the courts to pay-off her Visa or Mastercard...??
............ what price greed.?
Terry
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They re-pop your driver and you're taking buses to pay-off your credit cards .... other than that, everything is going your way ...l.o.l............
Terry.
My main problem with the law is that it uses IRS expense guidelines to determine how much your expenses should be, not actual expenses. Have 3 boys playing high school football who eat like horses? Sorry, your allowable food expense is only X. Have a 63 mile one way commute because that was the only neighborhood you could afford? Sorry, your IRS approved travel expense is only Y. Okay, looks like according to the IRS you can afford to pay Z towards your debt load every month, so you get to file Ch. 13, and pay Z per month towards your debt load. Never mind that when all is said and done Z is really Z - 300, or something like that.
Here's another dirty little secret - from a credit rebuilding perspective, Ch. 13 is WORSE than Ch. 7. A BK stays on your report for 7 years from the time it's discharged, not the time you file. A Ch. 7 is discharged almost immediately when you file, while a ch. 13 doesn't get discharged until the repayment plan is complete. So that means it could stay on your record for 10-12 years or more!
I'm all for personal responsibility, but Terry's right - the new law isn't about encouraging personal responsibility, it's about padding the bottom line of the CC companies.
-Jason
ps. I've never declared BK, and never plan to. No car or CC debt. But I've got plenty of family that are / have been in tight financial spots, due to job loss or medical bills or their own shortsightedness.
The ones who bother me are the people who bring this on themselves. I see it all of the time. I try my best to steer these people toward a car that is more affordable and practical but, noooooo. They HAVE to have the top of the line model etc...
I guess I should go back and read more about the proposed changes before I spout off on it.
I
Bingo........!
Terry.
Thanks again for your kind words, and when I finish the refi, I will post how that all went down. Of course, if it does not happen soon, I will prob. owe too little to refi! Oh well! Even with out refi, I can see having this car paid off in a year and a half. One of the perks of buying LESS than you can afford!
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It is nice to hear about someone taking control of their finances.. Keep up the good work, chevygirl!!
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