OK, here is the deal. I have fairly crappy credit due to a bankruptcy 7 1/2 years ago and some credit card problems a few years ago. I think my credit score is a 650 or a 660. At the moment I am driving a 96 Dodge Intrepid with over 210,000 miles on it. It has transmission problems among other things. (I am the third owner and the second owner was my parents so I knew the car when I got it, or I wouldnt have gotten it) I need a car in the WORST way. I am trying to baby this car along until January because I have a student loan in the amount of $7,000(AFTER tuition/books) coming.



I am 37, working full time, making $20K a year. I admit my credit isnt great, but I really cant wait until my taxes come back to go pay cash for a car. I expect this one to lay down at any moment and with a 12 yr old and a 2 yr old, this is NOT a good thing. My DH is older, works full time, makes $20K a year and doesnt care what I do as long as I get SOMETHING decent.


What I want to do is in January, go to a new car dealer and put the $7K and my Intrepid down on a car, not a brand new one(because of depreciation) but a low milage late model. Anything left over I would like to finance until March when I get my tax money back (around $4K)and I can pay it off. If worst comes to worse, I can pay the $4k on the loan and then pay the rest off monthly.


Now, is there anyway I can get a loan? I do not think Capital One would finance us since we filed bankruptcy on them way back when. I don't need fancy, but four door, reliable, and low milage is pretty much a MUST. Am I deluding myself?


Thank you for any advice.

you would use a student loan of 7K for your downpayment???????????????

Is this not irregular?

Probably, BUT, the interest is VERY low(3 or 4%) and there is no credit check. I know that I am supposed to use the money for school related expenses but without a car, I wont be able to attend school.

It's not only irregular, but if you're caught, your lender can call your note in (due in full immediately) at their discretion.

You will have to make your own decisions about this, and whether the risk is worth it to you.

This is not true. Student loans can be used for anything relating to the cost of your education.. Basically, anything that will help you in attending school including childcare, transportation cost(including gas, maintenance, downpayment on a car, buying a car just as long as it's needed to get to and from school, etc...), food, shelter etc....financial aid isn't just for tuition and books. Now, if you're using the fA to buy a car and it's not going to be use to get you back and forth from school that another issue.

I think it's an unwise decision to use a loan that you absolutely cannot escape to purchase a vehicle - assuming you want to use the full amount of the loan for a car. Using a little bit of the money, I can see, but the full $7K??

Go read the horror stories in the student loan forum and make sure this is how you want to use this money. If I were in your shoes, I'd spend a little getting this one fixed or getting something used, but reliable, for the time being, and use most of the money towards the education itself. How will you feel in 10 years if you don't finish school for some reason, the car you bought with this loan is long gone, and you are stuck with a debt you cannot escape, no matter what?

The one mistake people make managing money, is assuming the best possible outcome. I'm not saying be a pessimist, but I'm saying think about where this decision will land you, if things do not go as planned.

If I misunderstand your plans, my apologies in advance, but if you're planning to use the full $7K to purchase a vehicle, think past your nose. It's a risky plan with serious consequences if it doesn't work.

Ok, first of all, the "anything a person needs to attend school" argument is slightly incorrect. IF the lender finds out that the OP used $7k of a $10,500 loan to put a downpayment on a car, they could, as Pam pointed out, call the loan due immediately. The "anything" needs to be reasonable; I'm not sure a lender would see more than half of the loan as "reasonable."

Secondly, as Breeze pointed out, this can be a disastrous decision for another reason - you're pretty much stuck with the loans for life, or until you pay them off, whichever comes first. Also, you need to think long & hard about the fact that you're going to be paying for this car for a minimum of TEN YEARS - because that's the term of the loan you're taking out. So the car lasts for 5 or six years and you're still paying on it. IMHO, that's not a wise financial decision. Frankly, and I'm sorry to seem blunt, but you have a very low income and two children to raise. What are you going to do if something happens to your dh or the kids and you can't make the payments on that SL? It sucks to have your vehicle repo'd but it sucks more to default on a SL and have your wages garnished - ask me how I know.

And finally, you have a $4k income tax return coming to you ... heck, if you have to, file it electronically and get your money back in two weeks if you're on a short lease. Use that as a down payment. And this 3% to 4% interest - where is that coming from? I don't recall seeing an interest rate that low for used cars. I wouldn't call a 650 - 660 a "bad" credit score either. It could be higher, but it's not bad.

There are a lot of other ways to get a new car without using that SL money; I encourage you to consider other ways in which you can get the car. My experience has been that keeping SLs to a minimum is the best policy. I learned the hard way - I hope you don't have to learn like I did.

It has been awhile since I have dealt with student loans, but if you need a working vehicle to get to school, then this is a legitimate expense up to a point. Student loans are supposed to cover living expenses. This is a living expense. I used my student loan money to buy a computer back when I was in school. Nobody asked questions-- I really did need a machine to work on.

Of course this was some time back. I think the real issue here is how much debt you are putting yourself in for the long haul, and the possibilty that you may be short-changing a long term goal (education) for a short-term goal (a car). Others have already touched on that.

Are these Federal or private loans?? Personally I have never heard of anyone getting a lump $7000, at least from federal loans. Money is from those is usually dispursed each semester.

Personally I think what you are doing is a poor idea. If something happens that you have to drop out, funds have to be returned asap. It could put you in a whole heep of trouble.

If you have any major car dealerships near you they probably have a website for their vehicles. Look around till you find one you want (and can afford) and do an online application for financing. You'll probably get approved. Just don't go in to a dealership and ask for financing first because they may try and sell you something you don't want and tell you thats all they can do for you. Find a vehicle thats reliable, low miles, and you like and try and get them to finance it for you. Then, when you get $ from refunds etc...save them so you'll have a slush fund. I'd rather pay $199 a month and have $7,000 in a savings account then have no payment and no savings account.