This post is not a “how to” instructional about the best ways for those with poor credit to purchase a car; it is a true story of some friends who recently did. Hopefully, this tale will open some eyes and challenge readers to wake up and be aware of the high costs of a low credit score.
For reasons I do not know, Randy and Judy (fictitious names) have credit problems. Judy works at a job which requires the use of their car, while Randy is drawing SSI disability. They are both near 60 years old.
“We have a problem.”
With heads down and faces long, these two came to our door recently. Their car had died, was diagnosed with a blown head gasket and, because of its age, was not worth fixing. Feeling pinched because no car equals no work, they asked if I could give them a ride to go car shopping. “Sure”, I replied. “But I have a request — before we go looking, could you make the necessary calls to make sure that your financing is in order? ”
They agreed and went home to make those calls. The next morning, Judy phoned, sounding quite chipper, “Joe…good news! The Chevy dealer (in a town 40 miles away) told us that he will be able to find financing for us. Can we go look?”
“I thought you were going to check with your credit union. What happened there?”
“Well, they said that it had been too long since we had used their services and we no longer qualify.”
A Financing Fiasco
We took off after lunch and, while Randy and Judy met with the sales rep, I waited…and waited…in the waiting room. I was thankful for the Kindle app on my Droid. At around 6 PM, they reappeared, “We still haven’t heard back from the bank, so we might as well go on home. Our sales rep will call us in the morning after he talks with the bank’s loan officer.”
It was becoming obvious that Randy and Judy’s credit issues were worse than I had suspected.
The Saga Continues
The dealer called my friends the next day with news that the bank would require a very substantial down payment if they were to make the loan. With very little down payment money on hand, Randy and Judy were quite disappointed. To make matters worse, Judy’s supervisor informed her that she was in danger of being demoted if she did not get back on the job soon. So, with a touch of desperation setting in, my friends continued to seek financing.
The next morning Judy called me again. “Joe, we have some great news! A dealer (this time 30 minutes from home) will help us with financing! Could you give us a ride?”
I wasn’t able to that day, so we continued our quest the following day. This time Randy and Judy invited me to join them as they met with the finance officer — a man who impressed me with his straight up candor: “Understand that this financing is not from a bank; it is from this dealership. We have a program to work with those who have credit issues. We will charge 25% interest and we will require a premium price for a car. However, we won’t sell you junk…all of our cars have been thoroughly checked over by our mechanics.”
Bottom line: they paid $10,900 for a car which had a Kelly Blue Book retail price, excellent condition, of $6,640. Their total payout for the 45 months of this loan will be $18,300.
But Randy and Judy were ecstatic. They had found someone who would work with them, they had a “new” car, and Judy could go back to work with no repercussions.
After we got home, I made them an offer, “You know that people pay me to help them with their finances. I would love to sit down with you two and do my best to help you get your finances organized. And I won’t charge you a penny. What do you think?”
After a moment’s hesitation, Judy spoke up. “Joe. We are not afraid to ask for help. If we start getting in trouble, we will take you up on your offer.”
I guess that said it all. Maybe some people just can’t be helped.
However, as I stated at the outset of this post, maybe you, the reader, can learn from Randy and Judy’s experience. I hope so.
Photo by ilkerender