Life/Car/Debt Advice

twosense · ‎05-24-2010

Hi, I'm new here so thanks for letting me join in on the fun and development. The older I get, the more I care about my credit. However, I spent the last decade not giving a crap.

I bought a car that we couldn't afford a few years ago. A few months later, my ex was laid off and the car was repossessed. Shortly after that, I got pregnant, got laid off, and my ex was hospitalized for four months. I'm still paying for not being prepared economically for all of these emergencies.

I received a gift of a new car from a family member who I see every few years!!! In 2008, I was laid off and me (the most employable person I know couldn't find work for months. I was also going through a divorce and working on my credit with secured credit cards, etc. It was a huge deal when I even got a savings account at a credit union.

When I ran out of options (except going on welfare), I took out a predatory title loan. It's been almost a year and the company has collected about 5k in funds w/90 bucks going to the principal. I knew what I was getting into at the time, but now I want out.

I will have been at my new job for a year. My debt ration is extremely low. My FICO score is 602 b/c of a remaining tax lien. I got one removed this year. My title loan balance is 4,800. My car is probably worth 10k in trade in.

Here are my options:

- Wait another year until I've finished paying off my past due taxes and then take out a personal line of credit loan to pay all my bad debt. This means I'd blow another 5k to the title company.

- Trade in my car and assume a bigger long term debt, but have more freedom to pay other bills and be out of the big bad predator trap.

Obviously, I'm looking for better paying jobs and sending in extra payments when possible.

Please help.

Anonymous · ‎05-25-2010

I would do anthing to get out of that title loan. Go to your bank lay out the situation and see if they will help. Take a copy of your credit report with you so you don't have then pulling it and adding an inquiry if they w can't help. If you have to sell the car and if you can really get 5k out of it over and above the payoff consider buying a junker for that balance and put the money you save monthly into savings. You will have more to put to other bills enough to put away monthly to give you a nice down payment down the road. Re-evaluate in a year. But get out of the title loan today if you can!!! Those loans should be against the law in my opinion - they are not a service to anyone. Good luck

twosense · ‎05-25-2010

Thank you for responding. I think these loans should be illegal as well.

Anonymous · ‎06-02-2010

twosense wrote: "When I ran out of options (except going on welfare), I took out a predatory title loan." twosense wrote: "Thank you for responding. I think these loans should be illegal as well."

I'm not recommending doing business with the title loan places, and I'm not disagreeing that they're predatory. But you took a shot at things getting better for you in the near future when you sought out that title loan, which enabled you to keep the vehicle at that time. You could have sold the vehicle then, instead of borrowing against it, but you didn't...you saw a purpose in using a title loan.

Just because things didn't get better for you in the short term, and you got stuck with these predatory payments for longer than expected because you decided you needed that car, doesn't mean that places like these don't serve a useful purpose for some folks with short-term financial problems, and the high interest rates are in line with the risks associated with the loan.

This is an unpopular sentiment for sure, and I expect to be dumped on for saying this, but I don't feel that these loans should be illegal any more than I feel that freedom of choice should be illegal. I have no doubts whatsoever that had your situation improved within a few short months, and you had been able to clear this title loan, this post would not be here, and you would be happy today that you had had the option of obtaining that loan.

twosense · ‎06-02-2010

Of course, you're right. I was grateful for the relief at the time although I had an omnious feeling about accepting such atrocious terms. If I would have handled my life beter, I would have a credit card, a good relationship with a bank, more emergency savings, etc...

That said, I do think 100% interest rates are outrageous.

Anonymous · ‎06-02-2010

They are outrageous, for sure. No one ever intends for those loans to last for very long. I'm sure you didn't either. And sometimes, you just gotta do what you gotta do, just to get through the day.

Things are looking up for you as you rebuild. Don't get discouraged, if you need help, there are plenty of folks here who have been through similar situations and can offer good advice.

Yesterday's gone, and you can look forward to a better tomorrow because it will be better. You'll do just fine, so keep your chin up!

Good luck with everything, twosense!

Anonymous · ‎06-10-2010

Yes, get out of the title loan any way you can.

You might try talking to a credit union. Print out your credit report, walk in, tell them everything, see if they have any useful advice. Maybe they'll refinance your car loan or give you a personal loan.

Good luck!

twosense · ‎06-10-2010

Thank you so much for taking the time to respond. I belong to two credit unions. Unfortunately, neither is willing to help. The first one says that until my tax lien is removed and my credit score raised, they can't do anything. The second one says that they can't give me a credit card or loan until I"ve been at my job for two years. I've also called local banks and other credit unions. The only solution that I can think of getting another car, but I'd rather pay this one off completely.

mygoal750 · ‎06-10-2010

I agree with chris. I think you should sell your current car, pay off that title loan, and drive a junker until you can get yourself a little more established. I am currently driving a junker, and am now starting to look for a "newer" car. I am now driving a '91 honda...but it starts and goes and gets me from A to B, which is a vehicle's purpose, right?! I have learned so much in the 18 months since i started driving this car. MyFico was just one of the "teachers" in my quest for financial stability. But, by getting out from under that title loan, and having a paid for car, it will free up more money for getting the liens off your record. Just a couple of words of warning---before buying any used car, get a competent and trusted mechanic to give it a thorough inspection, and begin putting aside some money for repairs.

good luck, and keep reading all the boards. I've learned so much in the short time I've been on these boards, and it has been such a help. Keep us posted as to your success!

twosense · ‎06-10-2010

Thanks so much for taking the time to respond. Everyone has given me a lot to think about it. On top of all of it, I'm up for a job in my chosen profession. If I get it, I could pay off all of my debts in three months. The odds are slim, so I've got to keep pushing forward and try to live in reality. ;0