Bad Credit

[V]

It sorta makes sense, doesn't it? Anyone that purchases something for thousands of dollars would probably be wise to trust someone other than the person trying to sell them that product.

[Rikster]

Poor credit is not always because of bad decisions...

Regarding your sister's situation, what she needs is to restore her good credit rating, the car loan is a way to do this...

I would suggest she stay in a price range of no more than $10,000 and expect to keep the higher cost loan for a period of 1 to 2 years before she can expect a conventional lender to take out the sub prime loan...

Pick a vehicle that is under factory warranty and is considered reliable...Just good basic transportation...

Don't buy at these higher interest rates your "dream" vehicle...

Regarding the interest rate differences between a Bank and a sub prime lender, if she takes the difference in monthly payments and multiplies it by say 18 months (the time it takes to restore her credit), she will find she is paying an extra $1500 or so more in interest payments (depending on the amount of the loan) ...

Is $1500 a fair price to have her credit restored?

Once she is able to finance at Bank or factory rates, then she might want to look for her "dream" car...

Take care and good luck to your sister...

[Hakan]

Buy a bike instead.

[@theCBE]

Originally Posted by Rikster

1. I would suggest she stay in a price range of no more than $10,000

and

2. Pick a vehicle that is under factory warranty

All of that was good advice but where the hell are you going to find a car that has both those things.

[Rikster]

All of that was good advice but where the hell are you going to find a car that has both those things.

The trade off with any of the factories that offer deep incentives on their new vehicles , ie the domestics and Koreans, is that those same incentives accelerate the depreciation of their used vehicles...

Sub prime buisness is very lucrative to a dealer because they can buy their inventories at the blocks for a song ..

The remaining warranty might not be comprehensive, but certainly should be powertrain...

Take care...

[GrrlGoalie33]

Originally Posted by @theCBE

All of that was good advice but where the hell are you going to find a car that has both those things.

Many dealerships offer financing for bad credit. These dealerships would also have lease-backs to sell...

[Agamemnon]

Originally Posted by @theCBE

All of that was good advice but where the hell are you going to find a car that has both those things.

Kia?

[DementedReality]

Originally Posted by Agamemnon

Kia?

last year you could buy a brand new Grand Am for under 14k. the year before my mom bought a brand new Cavalier for 12k.

mind you i hate both those cars and wouldnt buy them, but if you cant afford to be picky, they are good priced new vehicles.

[Reaper]

Originally Posted by Hakan

Buy a bike instead.

That sounds nice and all but for many people a car is a necessary evil. I can't imagine going to Costco or going to play hockey without owning a car. Besides the obvious cargo issues I think the fact that I'd have to bicycle a 25 km round trip would be the deal breaker.

[@theCBE]

Originally Posted by Agamemnon

Kia?

really.. i guess you can tell who's never bought a car before

[FurnaceFace]

On the how to help your credit situation: She could try and get a Sears card or some other store card. They are usually more forgiving in their application process. If she can get a card, this helps as it pops up on her credit history. It shows someone was willing to take a chance on her. Also the advice someone gave on making sure her history is clear with nothing outstanding is wise.

On th side conversation Dominic et al are having. I'd agree with Dominic, you should buy stuff only if you have the cash to do so. My exceptions to this are housing or if the financing on the item is low enough to make good financial sense.

[Agamemnon]

Originally Posted by @theCBE

really.. i guess you can tell who's never bought a car before

You? The criteria was a car under $10k that still had some warranty.

Oh, but you've got a smiley, touche.

[JimmytheT]

I am a personal lender here in Athabasca.

If your credit sucks but you have a strong co-signor your loan can still be approved, however the presence of a strong co-signor will not affect the interest rate at much or at all. The cosignor is just there as sort of "back-up" if the historically bad debtor runs into credit trouble again and the loan or revolving line of credit goes into default.

You must also be aware that both the primary applicant and cosignor need to have the ablility to support the debt independent of each other. That is your monthly debts to gross monthly income ratio (called Total Debt Service Ratio or TDSR) must fall in line with whatever that financial institution's policy is. Most FI's TDSR Maximum guideline is b/w 40 and 42 percent.

If you have had previous paid collections or been discharged from bankruptcy or jsut had a history of bad repayment with your credit trades, you are probably going to have to suck it up and pay the high interest for a while just to re-establish your credit rating. You can think of it as the cost of rebuilding your damaged credit. Also note that no one will lend to you if you are currently in the middle of a bankruptcy (duh) or have an unpaid collection or unpaid judgement order etc.

If you have been discharged from bankruptcy you usually have to wait 2 or 3 years before someone will lend to you and even then you will need a co-signor or some form of good security.

Also note that utilities such as Power, Gas, Telephone, cell phone etc., only ever report to the credit bureaus when they are forced to assign unpaid balances to third party collections.

Hope this info is at least informative.

[BlackEleven]

I had my name submitted to a debt-collector once but the whole thing was a big mystery. I got a notice in the mail from a debt collection agency that I owed them money (it was a small amount, like $60 or something), so I phoned them up and they said that they got the debt from Sprint.

The strange thing is I've never been a Sprint customer. I told this to the lady, but of course she didn't believe me. So I asked for her supervisor. She gave me the Sprint account number that the debt was against. So then I phoned Sprint and they said they had no such account number and they never had.

Then I phoned the debt collection agency and asked for the same lady I was speaking to before. I told her this and suggested that she call Sprint as well if she didn't believe me. I never heard anything back, so I phoned the collection agency back a few days later and they said there no debts owed under my name.

I still find the whole experience rather strange. Was it some sort of scam to con me out of $60 or was it actually some sort of mixup? If if was a mixup does that affect my credit rating? And where the hell did they get my name and address from?

Anyway, it couldn't have screwed things up that badly because it was over a year ago and I got a mortgage since then. But I still wonder if that affected anything?