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Help! I need advice regarding a personal loan I was just approved for

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Established Member

Help! I need advice regarding a personal loan I was just approved for

Heres my situation:

I have a car that I owe $22,300 through DCU. My monthly payment is $383 at 3.99% for 65 months as I just refied with them. I realized that I just think this is too much car payment for me and I would rather have a much older but reliable vehicle with no, or significantly less of a payment.

So, I got a quote from Carvana. They are willing to give me $19,500 fot my car. Of course I would have to pay the difference of what I owe on it ~$2,300.

I figured I could pay this difference with a personal loan through my own personal local credit union. I was approved for $7,500 for 36 months at 12.99%.

I figured I could pay the difference and use the remaining ~5,100 to buy an older reliable car. However I think my payment for the personal loan would be around 250. Im not sure exactly yet cause i was just approved and they didnt tell me the payment details right away.

Anyways, is this a bad idea? Should I just keep the new car and keep making the 383 payment? What would be the smartest decision here financially? I had a ch7 bkry 4 years ago so I gigure thats why the personal loan is 12.9%. I need your help guys!
Message 1 of 11
10 REPLIES 10
Super Contributor

Re: Help! I need advice regarding a personal loan I was just approved for

Your new payment would be $252.67 for a vehicle that you no longer own.

 

If it were me, I'd just keep driving it and making the payment.

 

Actually, in a backwards way, it IS me... and I am making the payment.  Smiley Happy

 

We upgraded the wifes car earlier this year, and I inherited her old one.  It's a lovely vehicle, but it just isn't me.  I honestly don't know what I would replace it with tho, so I keep driving it and making the payment...

12/01/19 Fico 8: EX 732, EQ 732, TU 755.
11/08/19 Fico 9: EX 733, EQ 740, TU no idea...
Zero percent financing is where the devil lives...

Firmly in the garden until the next pre-approval arrives!
Message 2 of 11
Valued Contributor

Re: Help! I need advice regarding a personal loan I was just approved for

Keep the car that you know is reliable.

One $1000 repair on your downgrade and your whole idea is destroyed.

In addition, cars devalue less as the age.

Next year, your car may be worth what you owe after a year of payments.

Rebuild started in 2014  -  $100k+ unsecured credit in 2017  -  $300k+ unsecured credit in 2019.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!

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Message 3 of 11
Established Member

Re: Help! I need advice regarding a personal loan I was just approved for

Thanks for the input. I have been having anxiety and 2nd thoughts about this idea ever since I was approved for the personal loan.

I really love the car but at the same time I was thinking about what makes the most sense financially. Maybe keeping the car is the best decision. Its a honda so it holds its value very well.

Should I ask my credit union for a lower amount for the personal loan and use it to pay my credit card that has a 2k balance at 25% instead?
Message 4 of 11
Valued Contributor

Re: Help! I need advice regarding a personal loan I was just approved for

More food for thought: If Carvana will give you $19,500 for your car, that means you can sell it for $22,500 (or a bit more) on your own.

 

 

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/NFCU Platinum/PenFed Power Cash Rewards/PenFed Pathfinder AMEX/Citi Costco Visa - $96k total revolving
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Message 5 of 11
Established Member

Re: Help! I need advice regarding a personal loan I was just approved for

Its such a hassle trying to find someone who will buy a car that already has a lien on it because buyers don't trust paying for the car without immediately getting the title.
Message 6 of 11
Valued Contributor

Re: Help! I need advice regarding a personal loan I was just approved for


@strong_nostalgia wrote:
Its such a hassle trying to find someone who will buy a car that already has a lien on it because buyers don't trust paying for the car without immediately getting the title.

When you get the lender involved and have the buyer issue payment to them, they should feel fine about it.

 

When a few thousand dollars is on the line, some extra steps are fully worth it IMO. Especially when you were considering financing those extra few thousand dollars on a high rate personal loan.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/NFCU Platinum/PenFed Power Cash Rewards/PenFed Pathfinder AMEX/Citi Costco Visa - $96k total revolving
EQ/EX/TU: FICO 8's November 2019: 696/679/668, 14% utilization, AZE2 (w/ those 2 cards reporting 30% util), INQ's: 4/2/1
Message 7 of 11
Established Member

Re: Help! I need advice regarding a personal loan I was just approved for

I ended up accepting the personal loan but for a lowered amount of 2k at a rate of 12.99%. I am using it to pay my sole credit card balance I have of 2k/25%.

Regarding the car, I will attempt to sell it privately. If I am unable to, I will try to refinance again for an even lower rate in a few months. Although, I don't believe I will find any better than my current rate of 3.99% with DCU due to my ch7 from 5 years ago.

Message 8 of 11
Valued Contributor

Re: Help! I need advice regarding a personal loan I was just approved for

Pay the cc.

Keep the Honda.

Quit stressing.

Rebuild started in 2014  -  $100k+ unsecured credit in 2017  -  $300k+ unsecured credit in 2019.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!

10% Rotating - Discover                    5%-20% - Amazon & Lowes                3-6% Groceries - NFCU & Amex Preferred
3-5% Gas - NFCU & Ducks Unl         4% Dining & Entertain - Savor            3% Travel & Hotels - Flagship, Propel, & Uber
2% Everything Else - Flagship          1% Cancer Charity - Fifth Third          0% Finance Promos - Venture & QuickSilver





        
Message 9 of 11
Community Leader
Super Contributor

Re: Help! I need advice regarding a personal loan I was just approved for


@Shooting-For-800 wrote:

Keep the car that you know is reliable.

One $1000 repair on your downgrade and your whole idea is destroyed. 

In addition, cars devalue less as the age.

Next year, your car may be worth what you owe after a year of payments.


^^^ this

it's no way I would pay $252/mo and have basically nothing to show for it but some clunker. 

GOALS: Garden til APR 2020 and 800 Club


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Message 10 of 11
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