At what point should I execute this?

[lajntx]

I need a concensus of opion on this one.

From other posts elsewhere I have sucky credit... going to be that way for a couple of years

557 -EQ, 513 -TU, 565 -EX fako

Earlier his year due to the car I had going kaput and not being feasibly repairable, and none of the traditional dealers/lenders willing to finance anything to me with 2K cash down due to no banks making any subprime loans at the time ( a car for less than 2K here isnt going to pass most emissions testing so wasnt an option ). I was left with 3 options:

1. Buy here- pay here and not get any CB reporting

2. JdByrider or Drive Time

3. Road loans and hope to be approved

My job was becoming in jeopardy so I had to do something and do it yesturday. Thus there was no time to purse # 3, #1 I felt was a waste of time to go through all that and not get anything for it in the end though it would probably be cheaper than # 2. I settled for #2 because I could get into a car the day I arrived and it would be reported to all 3 CB's.

Granted I got royally screwed if one looks at it in a traditional sence... 2002 Cavalier with 84K miles ( not bad mileage for 7 years old ) for almost 10K and the 2K down @ 20% APR. To date any problems I have had with the car JDB has repaired them at no cost.... sensor on the AC went out and the radio the car came with wasnt playing CD's... Thus far the car otherwise has been mechanically sound and have taken it on a couple of 1000+ mile trips with no issues.

Now, comes the exit strategy since I cant fanthom paying on this thing for the next 2.5 years with bi-weekly @ 20% APR. Nothing quite like paying $160 and about $100 goes to interest.

I'm going back to school to get my MBA, and dont anticipate not being able to pull off what I am about to describe off and paying it back quickly

Since the car is 20% and SL's are around 3% - and deffered. I was seriously thinking about for the next year borrowing as much as I can and pay down that car note and throw any additional money I get over the next year at it... end of year bonus, income tax return, etc, and be done with it. Once I graduate in a couple of years take the additional income I will be making and pay the SL off as quickly as possible.  Sounds good on paper doesnt it? Now if it will work out perfectly in real life! lol

The question is:

 Let's say I pay the car off in Dec 2010/Jan 2011 and it has been reported to all 3 CB that monthly payments from Apr `09 to Jan `11 were made on time. All other credit rebuilding has taken place ( successful disputes & opening and having positive revolving trade lines ) Scores in the upper 600's across the board. I take that nice big 2010 income tax return, the 02 cavalier, and walk into the local stealership looking to finance a late model used or new midsized moderately priced car. What happens?

Is that long enought to re-establish auto credit?

Will APR theoretically be below 10%?

Does the higher SL balance hurt?

Any other input greatly appriciated!

[Anonymous]

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@lajntx wrote:

I need a concensus of opion on this one.

 Let's say I pay the car off in Dec 2010/Jan 2011 and it has been reported to all 3 CB that monthly payments from Apr `09 to Jan `11 were made on time. All other credit rebuilding has taken place ( successful disputes & opening and having positive revolving trade lines ) Scores in the upper 600's across the board. I take that nice big 2010 income tax return, the 02 cavalier, and walk into the local stealership looking to finance a late model used or new midsized moderately priced car. What happens?

Is that long enought to re-establish auto credit?

Will APR theoretically be below 10%?

Does the higher SL balance hurt?

Any other input greatly appriciated!

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You haven't explained why your scores are so low.

Past BK or REPO? or just credit card and medical costs. 

So it is hard to tell you anything.

realistically you dont need to have a large timeline of ontime payments to see a bump.

Although I do not recommend it for most people if you think you can roll it into your student loans do it to get out of the debt/interest you are in now.

FYI- your cavalier will not be worth much when you trade it in so do not expect much. It really would not be worth much if you traded it in right NOW.

1-re-establishing auto credit will be re-establishing your credit picture on the whole. Thats up to you.

2-No one here can tell you what Future APRs will be. Realistically will 1 digit APRs be offered in a year- Probably. Will you or me or anyone else qualify- no idea.

3-no not really not unless you are paying the student loan. Your loan will be showing deferred and realistically 8K is not a huge SL amount.

That being said: you should be aggressively trying to save every dollar you can right now and bank it. I mean if you pass change dropped on the ground pick it up, since you drive a lot carry a cooler and stock it with soda so you are not buying on the road...SLs can help, but you do have to pay the money back.

And you have to be sure that the job you are getting will allow you to live comfortably and pay the loans.

I know people with 100-150K  student loans, heck they rolled their last year of colleges living expenses into ther loans and then took jobs making GASP 50 K a year.

I know a prosecuter for the City of Cleveland with 165K in loans who waits tables on the weekend to service his debt.

[lajntx]

Thanks for replying USMC.. its a combination of BK, medical, and CC's ( no repos ).

As mentioned in another post, in 2005 I bought an 05 sunfire, and then 2 months into it landed in an extended hospital stay... by the time I came out. Capital One was demanding full payment on the note and was about a week away from repoing when I filed BK 13 to save the car and do something with the massive medical bills. After plan confimation, a family member paid the C-1 note off in full. Then this year being the cheap lemmon that it was I had both the tranny and engine went out at the same time.

I know the Cavalier isnt worth much now, nor will it be worth much whenever that day comes... I might even just keep it as a second car.

Carry a cooler? great minds think alike. I just got back from Wal-mart with 3 cases of Dr Pepper & bottled water to restock the supply. I'll do you one better.... clear a shelf out in the freezer and invest in some cheap dollar store ice trays that way you never have to buy bagged ice. Yes, I do also pick up pennies on the ground and save the empty cans to take to the recycle center later for $$$ Plus, I always pack my lunch and seldom eat out.

As far as the APR goes, typcially in your experience when you see someone come off one of those "rebuilder loans" at 18+% and done the other things needed creditworthiness wise....what are the ranges you typically have seen? Before I screwed up my credit, the rule of thumb tended to be the next auto loan would be around half of your current APR provided your credit score hadnt gone sour. I ask because I'd be a little ticked after doing all that with a "bad credit loan" only to be told by Ford Motor Credit the best they can do is their "bad credit loan" and be stuck with 12-13%.  Granted, that would be better than the responce I got last March, but still a bit out there. Yours or anyones "guesstimate" is nothing I would write in stone or expect someone later to live up too because each situation is different... but as a nonbinding reference point only... what is you best range estimate based on your experience ?

Normally the SL roll is something even I wouldnt recomend. But with the auto loan being 20% and some change,  and the SL being around 3% and deffered... adding that extra 5 or 6 K on it over the next year to year & half isnt going to matter much in the grand scheme of things, plus the plan is to aggressively work that SL balance once I finish my MBA in Dec 2012. With the carry over from my bachelors balance + the estimated MBA balance with the car float... and for kicks lets say the entire last year ( 2012 ) I roll over the living expenses so I can focus 100% on school and get out... I should cap out around 70K,  and worst case scenario is I would be in that 40-50K entry level MBA salary .