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Who offers the best sub prime auto loan?

pinchshopper 490 414 March 27, 2012 at 11:12 PM in Autos
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My gf filed a chapter 7 last year because of divorce. Everything but the mortgage was discharged last Sept, leaving her with only the mortgage. There were no auto loans involved, only cc and medical debt.

She is about to change jobs and will be traveling daily for work, so we are considering buying a new more economical car for her to drive for work. Probably a Subaru Impreza, Hyundai Elantra, Hyundai Veloster or Mazda3 Skyactiv.

I'm thinking that we'll have to take a sub prime loan for a short time til her credit score builds and we can refinance, but I'd rather have my own financing source instead of going through a dealer. Her present Equifax score is 593, but Transunion is 623 or 625, I can't remember. She has great income and a very low debt/income ratio.

What's the best source for sub prime auto loans presently?

Has anyone seen a deal on either of the above mentioned models?

Thanks

18 Comments

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#16
She should have just discharged the mortgage. That huge mortgage will be lingering over her head and since she already filed for bankruptcy she cannot do it again. If she becomes insolvent then her credit will be the last thing she should be worried about.

Also avoid Hyundai at all costs! The newer cars are great for 1 year but after that the maintenance and the hassle of constantly repairing it will be costly.

Quote from pinchshopper View Post :
First, let me clarify about making an impression at work. We're not high society folks. We don't see autos as a status symbol, and couldn't care less about what people think about the cars that we drive. What I meant is that my gf is a nurse and with her new job, she will be visiting patients in their homes. I'm sure that her new employer wouldn't want her rolling up to a customer's house in a beater. It doesn't make a very positive reflection on the company in my opinion, even though the only thing that really matters is the quality of care that the patient receives.

Since gas prices are so high, used cars with good mpgs are fetching a premium, so finding a deal on a cream puff is a little challenging. Plus the inherent risks associated with buying used, and the maintenance costs that might be required to make it dependable and safe.

I understand your logic, and I am in total agreement with your approach. However, the more I ponder on it, I tend to lean more towards the new car as the smarter route to take.

The new car will be paid for in 19 months. The interest we will pay is approximately $1400 over the term of the loan, even less if we are able to refinance fairly early into the 19 months. This seems like a bargain since this repairs her credit, and we get to realize the gas savings from the beginning, which is a substantial amount with 17 mpg compared to up to 47 when driving up to 500 miles a week. The gas savings alone is over $200/mo, which is 20 % of our $1000 monthly payment, and that's using a conservative mpg of 34 for the new car. Plus, the mileage reimbursement for 500 miles/wk would be $200/mo. Throw in the 100k warranty, 5 yr FREE roadside assistance, Bluetooth and audio controls on the steering wheel for safety, the positive reflection on the company, and the excellent resale value of the elantra and that adds up to a lot of pros.

I keep trying to convince myself that I need to stick with my usual logic, which is very similar to yours, but when I crunch the numbers, and weigh the pros and cons, the new car seems like a smarter business decision. The $4 price of gas really factors into the equation when you start crunching the numbers.
You are basically buying the warranty and not the car. The car looks really nice and has a really nice MPG but there are car makers that offer the same car with a quality build (eg low maintenance and high reliability). One year from now (probably earlier since you mention your GF drives 500 miles per week), your brand new Hyundai will spend more time in the shop than actual driving time.
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Last edited by Nollywood April 3, 2012 at 12:55 PM
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#17
The Hyundai is a pretty nice car I was just looking at them at the Denver car show, the next question is does the dealer or Hyundai offer a loaner or would she just use one of your older cars if the car is in the shop. At 25K per year you need to make sure all your scheduled maintenance is done on time. I think you will be fine, she should be able to pay for the car with the mileage allowance of 55.5/per mile you will be getting 1110.00 per month figure 4.00 gas come to about 220.00 per month add in insurance at whatever your cost is and the payment is really pretty low. I would probably plan or replacing the car every 3 years the way the IRS works ( check with your tax preparer for details) you are depreciating the car using the mileage method;

http://www.irs.gov/pub/irs-drop/rp-10-51.pdf

.04 Depreciation. Under ยง 1016, a taxpayer must reduce the basis of an automobile
used in business by the amount of depreciation the taxpayer claims for the automobile.
If a taxpayer uses the business standard mileage rate to compute the expense of
operating an automobile for any year, a per-mile amount (published in an annual notice)
is treated as depreciation for those years in which the taxpayer used the business
standard mileage rate.


So at a 1K mile per month then in 2 years you will have the car fully depreciated so you may not be able to take the full 55.5 cents a mile.
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#18
Quote from Nollywood View Post :
She should have just discharged the mortgage. That huge mortgage will be lingering over her head and since she already filed for bankruptcy she cannot do it again. If she becomes insolvent then her credit will be the last thing she should be worried about.

Also avoid Hyundai at all costs! The newer cars are great for 1 year but after that the maintenance and the hassle of constantly repairing it will be costly.



You are basically buying the warranty and not the car. The car looks really nice and has a really nice MPG but there are car makers that offer the same car with a quality build (eg low maintenance and high reliability). One year from now (probably earlier since you mention your GF drives 500 miles per week), your brand new Hyundai will spend more time in the shop than actual driving time.
Why would we discharge the mortgage? I don't understand your comment at all. We need a place to live and a 5% mortgage isn't bad at all. We have no intentions of defaulting on the mortgage. She did not reaffirm her mortgage, so, God forbid, something happens, they can't come after her for any money.

She had a 99 Hyundai that she sold to her brother that is still going strong at 240K. We're Toyota fans obviously, based on the vehicles that we presently own, but I think that their quality has gone way down in recent years. Is that just your opinion on the Elantra, or do you have some data to back it up? I haven't read anything to that effect, and would appreciate any data that you have to back up your statement.

I drive a 2000 Tundra 4wd that I purchased new when they first came out. They had a TSB for cracked exhaust headers that I luckily found out about because a friend of mine was the service manager at the toyota dealership at the time. Luckily I got that repaired under warranty.

They had an engineering design flaw as well on the front brakes, as well as tacomas and 4runners within the same year range. Unless you live on entirely flat land, the rotors would warp due to the underdesign of the caliper and rotors. They never did admit to the problem, but some were lucky enough to have the manufacturer cover the cost of updating the front brakes to the 2004 improved design. I wasn't so lucky because I was way beyond my warranty period when I found out about the TSB. My buddy no longer worked at the dealership, and when I complained, the dealer just said that the Tundras were rough on brakes. I ended up having to upgrade to the 2004 improved setup at a cost of $600 for just parts, I did the labor. Two years have gone by now and no more warped rotors. It was a factory defect that they wouldn't admit for obvious reasons. Toyota will fight you tooth and nail over a warranty claim. I've been driving Toyotas for over 25 years, but they are slipping these days when it comes to quality and design.
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Last edited by pinchshopper April 3, 2012 at 03:47 PM
#19
You will have car debt forever. Terrible plan.
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