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Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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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.
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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ChevyGirl
LOL, that's the best phrase I've ever heard!! That's about where I am with my Titan.
Car_man
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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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Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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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!
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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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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