I make about $3500 a month after taxes and I live in an area that is very bad for transportation. There is no bus route or anything like that to get to my job and I work night shift so I have to leave at like 10pm. Riding a bike would be very dangerous on highways at night.
I also have bad credit. 669 vantage score 3.0 by Experian. I don't know if that's a good credit measurement, tbh I don't really understand finances at all. But the point is I am struggling. I still manage to stay afloat every month because I live with 2 roommates and so I pay $550 in rent/utilities each month. But I have absolutely zero savings, I'm paycheck to paycheck.
I can start budgeting better to save a little bit each month and probably come up with a downpayment of a few thousand for a used car. But my question is would this be a good idea? Everything I read says to never get a car loan with bad credit cuz of high interests rates but I literally don't know what else to do.
I previously had two used cars that my family helped me buy from Facebook Marketplace for $3000 but they both broke down from several problems. The Kia Soule's engine seized up and the Nissan Altima transmission failed. I gave up on driving a year ago because of it but the uber expenses are so much, i'm miserable.
I was thinking of getting a loan for an $11k used car I see on Carmax but I don't know how realistic it is. But the thing is even just paying $500 a month would be a big improvement for me.
Advice?
I spend about $800/month on uber rides to and from work. I want to get a car loan even though I have bad credit because this is unsustainable. Bad idea?
byu/Catslizardsandrats inpersonalfinance
Posted by Catslizardsandrats
28 Comments
You have to weight total cost of the car vs what you spend now. 800 sounds like allot but what is your car payment + insurance + gas + upkeep going to cost you monthly? I suspect just about the same if not a little more.
Buy the cheapest Toyota corolla you can cash. Like Al you need is an engine that works, seatbelts, breaks, and air bags. Nothing else needs to be fancy. Then work on your credit.
What’s the commute distance?
Car payment + insurance + gas + maintenance+ parking can easily be over $800/m. Not very many used electric cars for sale that are cheap to buy either.
Here is a thought exercise for you. What could you rent walkable or bikable to work for $1100 a month?
The car you get for 11k is not guaranteed to be more reliable then the cash cars you where purchasing, but you are going to quickly be upside down on a high interest rate car loan and a car that you are required to carry pricy insurance on. If you could cut the uber for your daily commute back and forth and just use it recreationally you save a lot of money with minimal risk.
But if that is not possible I would keep buying beater cars in cash. Because the only thing worse then your 3k car dying after a year, is your 11k car dying after a year and you still owing 9k at 24% interest!
The real question is how do you make $3500 after taxes with $550 in rent yet barely make ends meet? Where is the other $3K going?
Does anyone you work with live in your area? They could be your ride for $400/mo?
oof yeah $800/month would make me cry into my ramen. been there with the credit score panic, when I moved to Denver my score was 650ish and I got pre-approved at 13% for a 2012 Honda Fit. monthly payment was like $240, insurance another $120, gas maybe $150? still saved me $300+ vs rideshares. credit unions are way more forgiving than dealerships if you explain the night shift thing
As someone who was more or less in your exact situation. It would be alot cheaper to finance a car. But I would say buy a cash car. Not all cash cars are bad, so dont listen to the “upkeeping a cash car is expensive ” comments. Have a mechanic look at it, ensure it is in good shape. Toyota or hondas are peak for this. And ride it til the wheels fall off. The amount you’ll save is astronomical. Gas isnt that high and insurance will be a little pricey due to the car being old, but it wont be $400 a month. And you can only get liability until you feel you are safe in your finances to go full coverage on a cash/financed car. If you do finance to be safe and have the warranty. Get any Toyota or Mitsubishi, you can get those certified pre owned therefore you save a little and keep the warranty. But for rn I’d highly suggest a cash car. Speaking from experience, I had a 2k 01 pathfinder for 1 year. Saved 7k and bought brand new. You CAN Do it!
Can you get a ride with someone? Offer them money and save the difference.
Even if you have to pay $100 a week it’s cheaper than car payments, insurance and maintenance. $100 seems like a lot but I don’t know how far your going etc.
You don’t mention any other need for the car. The biggest advantage of getting a ride is it will (should) allow you to save money and your credit score should improve.
You need a basic rock of a car. Any low level honda(civic/accord), toyota(corolla/camry) is the best bet. Not fancy, run forever, cheap on gas. Maintain it and drive it until it dies. Yeah, its not glamorous, but it will save you tens of thousands of dollars until you can get something nicer.
And when you do find something nicer remember this rule- if you can’t pay it off in 3 years, its too expensive. Never lease…
Could you carpool? Even if someone could only take you half of the distance, that would save you a ton on Uber costs.
An old Toyota or oddly, a late 90s early 00s buick sedan are both very reliable.
Get a Toyota not a car known being shitty. And if you don’t get a Toyota Google that specific make and model car to see if there’s any common issues. Kia is known for blowing motors, Nissan is known for bad transmissions. Honda and Toyota are known to be way more reliable. You can save a few grand and get one off Facebook Marketplace. You can try your bank/ credit union for a loan or do in house financing. The buy here pay here lots are going to be ridiculously expensive most likely but maybe you could use that money to pay off the principle early to avoid massive interest.
Get a running Toyota Corolla, Honda civic / accord.. from the early 2000s. They last until 300k+ miles easily.
Is there anyone you can carpool with to or from work? Even if they don’t offer it for free, people love a good small cash incentive, and it should be cheaper than Ubering at the very least. You’d also probably be safer than random drivers.
Also, is your work within distance of an electric bike, electric scooter, or even just a normal bike? Look at transportation options that you don’t need a license or insurance for.
Carmax will probably finance you however your payment will probably be 600 plus per month plus car insurance. If you do go the carmax route ask about their warranty you’ll pay more but you don’t sound like you are in the situation to pay for a major repair bill. Haven’t seen anyone mention this but if your buying a used Toyota or Honda do your research ask when the timing belt and water pump been replaced. Over 1k job to replace them.
669 isn’t bad credit, that’s actually workable. You won’t get a 3% rate but you’re not in predatory territory either. Probably 8-12% depending on the lender, which on an $11k car is maybe $30-40 extra per month versus good credit. That math still destroys what you’re paying for Uber.
The “just buy a cash car” crowd isn’t wrong in theory, but you’ve already tried that twice, lost $6k, and spent a year stressed out of your mind. Sometimes a financed car with a warranty is actually the more conservative choice.
Once you have the car, throw extra money at the loan whenever you can. Even $50-100 extra per month knocks months off and saves you on interest. But the bigger thing is you’re spending $2,950 after rent and can’t account for most of it. That’s the real problem. Track every dollar for 30 days, even just in your phone’s notes app. Food and vending machines are probably a bigger leak than you realize and the easiest thing to cut.
Get a reliable car (Toyota or Honda, nothing fancy). Although old Lexus (2008-2015) might be a good option, they’re relatively cheap and reliable AF.
Fix the transportation problem, then actually look at the budget.
If you can afford $800 a month on uber rides, get a used car with a $400 payment $100 insurance and use the other $300 for gas
Cheapest reliable car you can, Toyota, Honda, older non-CVT Nissan, Mazda, Subaru, etc. Use the savings to rebuild your credit and set up a “next car” fund.
Have you got a budget? Or do you track what you are paying? credit cards? current loans?
Because even at $800/month for Ubers, you have $2200 left after your rent. What are you paying it on, that you have no savings?
Go to your bank that you personally bank with and get the loan from them. They will approve you and tell you how much you can spend, and also only hit your credit score one time. The car dealerships hit your credit like 40 times. I’m exaggerating but it’s a lot. Also, the bank will give you lower interest rates. This also gives you negotiating power when you get there. When they ask what you wanna put down, you say na I wanna talk about the interest rate and the total cost of this car because I’m already approved for financing. You have more power to walk away and not get scammed. Car payments suck, but having a peace of mind from knowing you have a reliable new car with no issues or maintenance and only 15,000 miles isn’t worth $375 a month.
Maybe Im crazy but I don’t think a 669 is that terrible for credit. Also, you said your dad was advising you, does he have excellent credit and may be willing to cosign on the loan? That is what I did, and I was able to buy a 2022 Toyota CHR with only 35,000 miles on it for $378 a month, full insurance coverage at $155 a month through State Farm (and in Florida, where rates are crazy).
Lease, great option for your exactly scenario. 3 years, always under warranty so no major repair out of pocket and after the 3 years it’s treated by credit bureaus as you pay off loan so it will also greatly improve your credit score.
If you already live paycheck to paycheck why make it way harder for you by getting a high interest car loan for a car you can’t afford. Carmax is also way overpriced, you could probably pay 40% less from a first party selling on marketplace and save several thousand in sales tax free when you go to register the vehicle as a “quote un quote” gift from a friend.
I had worse credit and was able to get a 2010 Mazda 3 for 400 a month from Carvana with less than 100k on it.
You can definitely get a car and you’d end up spending less than what you do now.
Do you have a place to park that is reliable/free? Have you calculated approx gas/car insurance costs?
I don’t think an old car would save you much money. You say the loan would be $500 a month. Then you have insurance and gas which could easily get to $800 a month so it’s a wash.