How Much Can a Family Member Help?

HOW MUCH CAN A FAMILY HELP?

QUESTION:
Hello,
I will try to make this question simple! I have bad credit & will be filing bankruptcy soon.  I need to get a used car and my budget is less than $13,000.  I would definitely be able to make the monthly payments.  My younger brother who is 26 years old does not have a license or a permit but is willing to finance the used car under his name and he would let me drive it. Is there any alternative solution than this?  Any kind of suggestions would help.

Thank you! –Yumi (From Pennsylvania)

ANSWER:
Well you are in luck- It is possible to file bankruptcy and still get a car!!! I would NOT recommend using your brother for a couple of reasons…#1 you need to reestablish some good credit and if you let him buy your car then no one will know that you have made all the payments (financing a car is a great way to re-build your credit score). #2, it’s illegal. The lenders want to know where the car is and who the real owner is. Don’t feel bad because I do have a lot of people ask me that same question. Something worth considering is having him be a cosigner on the loan. You are very lucky to have a brother that is willing to help you with re-establishing your credit!
Remember, to a bank or lender everything is based on “risk”. If you lower the risk, they (the lender) will be willing to take a chance on you!!!  By coming to the table with a down payment, this will lower the lender’s “risk” and improve your chances of getting a loan approved. So hopefully you can convince your brother to help lower the risk of the car loan.

Keep in mind that to get a car loan while you are in bankruptcy, there are some rules you need to adhere to. For example, you must have done your “meeting of the creditors” before most lenders will let you borrow money.  You also must keep in mind that you may not be able to buy you DREAM vehicle. $13,000 will buy you a reliable car or an unreliable car. Make sure it is as reliable by doing research on the brand and vehicle history. Rebuilding your credit is a long road, but it is easy if you take smart little steps at a time. Doing things correct now will make your life easier in 4 to 5 years from now when you want to upgrade to a better car.

Hopefully I didn’t complicate things too much for you and gave you a little information that you can use to help your car purchase be more understandable for you!!!! Good luck and let me know how things go!!!

Sincerely,
Todd Helmick
Royal Automotive/Lexus of Tucson
Phone 520-795-0760

Preparation

CAR SHOPPING SURVIVAL: PREPARATION

“The man who is prepared has his battle half-fought.” –Miguel de Cervantes

Okay, so maybe comparing car shopping to a battle is slightly melodramatic, but it is important to recognize that a prepared shopper is a smart shopper.  Before stepping foot into a dealership, prepare yourself by doing the following:

Know what car you’re looking for

Not only know what car you want, but know everything about it.  The key to knowing what you’re looking for is researching the vehicle’s value, appropriate pricing for add-ons, and what other dealers are pricing the vehicle at.

                Research, Research, Research…

Kelley Blue Book (www.kbb.com) and NADA Guides (www.nandaguides.com) are great resources for vehicle values.  If shopping used cars, Kelley Blue Book will likely be your best resource.

When comparing vehicle pricing at different dealerships in your state, Edmunds (www.edmunds.com) or Auto Trader (www.autotrader.com) provide several vehicle options at different dealerships.  This is a great way to compare prices and get a feel for the value of the car you are looking to buy.

At Royal, we price our cars based on the market. With the power of the internet, we research the competition daily, so you can be sure that our vehicle prices are very competitive.  This means you do not have to be a good negotiator just to get a fair deal.  Royal has created a Fast, Fair, & Simple process that keeps the customer in charge at all times.  (Click to learn more)

Research local dealerships

Perform some background research on your dealership options:

Know what they stand for and how they do their business

Will you get the answers you need without getting a headache?

Look at customer reviews online

Do they have a good reputation?

Are past customers satisfied with their experience and the price they paid for their vehicle?

A great places to look at customer reviews is DealerRater (www.dealerrater.com)

Do some further research on their service department

How well was the vehicle reconditioned before you bought it?

Did they replace any worn out parts?

If so, did they use the top of the line, or cheap aftermarket parts?

   (*note: Royal is meticulous about using only the best quality parts)

Making the Purchase

MAKING THE PURCHASE

When you’re getting ready to buy, there are a couple more points to consider…

1.       Do you like the sales person?

When deciding whether to buy your car, consider whether you like your sales person.  Purchasing a car is the perfect time to whip out your first impression skills.  If you don’t like the impression they give you, move on to another sales person or dealer.

2.       Avoid sales pressure!

Make sure the car is right for you!  If you’re torn between a certain make and model, feel free to go to the other dealership to look at the other car.  Don’t be pressured into buying a car on your first visit.  Remember, you want to do business with a sales person who wants to cater to your requests and has your best interest!

3.       Do the price, payment, and terms fit your budget?

Purchasing a vehicle is a big commitment.   Be sure to select a car and payment that fits your budget.  We would never want our customers to ruin their credit score by going into debt after purchasing their car.

4.       Decide if you will trade in your current car

After researching what your car is worth, have an idea of how much you would like to get for it. Knowing what the fair price would be for your trade is important.  Some dealerships inflate the trade value to mislead you and make you think you are getting a better deal for your trade.  But in actuality, they are adding that extra amount that they are “giving” to you to the purchase price of your new vehicle.

Also remember that the value of your trade-in should never change according to the vehicle you want to buy.

5.       What is the MSRP (“market value”) of the vehicle?

Be sure that the price of the vehicle you are buying is at a fair price.  Get the bottom-line price without haggling back and forth!

6.       How much money should you put down?

The amount of money you put down will affect your payments.  Ask your sales rep for clarification on the payments.

7.       You don’t have to buy a vehicle at your first visit to the dealer. 

Know your exit strategy so that you don’t make any quick decisions that you feel pressured to make.  SHOP WHERE YOU ARE TREATED THE BEST AND GET THE MOST INFORMATION.

 

 

Paying Off Your Debt

PAYING OFF YOUR DEBT
80% of Americans are in debt, and the average person has 3.5 credit cards.  With debt in multiple places, it can be discouraging to begin paying everything off.

If you have multiple debts, start by listing each credit card account that you have.  Next to each account, write its interest rate, outstanding balance, payment due date, credit limit, and the minimum payment due.  This list provides you with the big picture of your debt.

Now that you’re aware of each of your debts, focus on one debt at a time.  Start with the one you owe the least on, and apply whatever you can to that single debt until it is paid in full. It is important to pay more than the minimum payment if you are able to.  This will keep you from paying more in the long run since credit companies collect interest on the remaining money you owe.  (Don’t forget to make minimum payments on all other cards at the same time!)

Next, prepare a budget that takes into account your monthly income, bills, and other expenses.  Keeping track of your purchases can help highlight unnecessary spending. To keep better track of your purchases, try online bill pay.  Enrolling in online bill pay helps to organize your payments, dates, and transactions.  Automatic bill pay also eliminates worry of missed payments. Some online bill pay sites track the categories that you spend most of your money on.  These trends can help you both understand your spending habits and set the best budget for yourself.