Re: How to cash in with Cash for Clunkers with Bad Credit?
08-02-2009 04:20 PM
I think usmc has presented some compelling things to think about.
1. The value of CFC may be offset or more than offset by the higher costs of interest on a loan with current credit derogs.
2. Fixing the financial problems and then credit issues should precede considering a CFC UNLESS you can find a vehicle for $3500 to $4500 that you can trade the existing vehicle for and pay nothing or next to nothing out of pocket.
3. The current vehicle has more value than $500. It is worth $14,000 in replacement value based upon presented scenario. As usmc said, the least expensive vehicle is the currently owned vehicle in most circumstances, even with repair costs.
4. Cash reserves. If reserves are stretched to the point that unexpected expenses (a part of life) have caused lates, the additional car payment will add stress to this situation, not relieve it.
5. Insurance costs will increase as the lender will require full coverages to protect the loan vs. liability, uninsured & PIP on the owned vehicle.
6. The savings in interest over the term of loan now vs. in one year with credit cleaned up and repaired presents far more value than CFC presents and does not add to financial strain in the interim.
These are all FYI ideas and commentary, not judgements. Obviously the OP will make the final decision. However, I believe OP is distracted by the CFC and not doing all the math to see if CFC is actually a good deal (in current circumstance).
As in poker and sung by Kenny Rogers, the gambler, you gotta know when to hold em and know when to fold em.