Another car buying question - can a relative provide the loaned $$?

[bal_ny]

I'm trying to buy a reliable car before filing Ch. 7. Filing will happen early to mid-May.

At this time, I've been unsuccessful in finding a car that I can pay cash for, so I'm trying to finance something for under $5K. I've gotten one company to agree to financing me... the problem (other than the 25% interest) is that the dealer he works with doesn't have a car to fit the requirements of financing. He's looking for the right car but my nerves want this to be settled already.

My mother wants to take a loan on her retirement at 12% and loan me that money to buy a car (which would open up my car options). We would open a joint bank account, which would allow me to have the agreed upon payment direct deposited out of my paycheck bi-weekly. I would be responsible for paying back the full amount of the loan + interest.

Is this permissible? I know if it were a regular bank, I'd have no problem but does the fact that it's a family member screw me up? My lawyer's in court this morning and I was hoping to get an answer here while waiting until I can contact him.

[keepmine]

Leave your Mom and her retirement out of this.
If your mother doesn't properly record the lein within the period of time allowed under your state law, the trustee will snatch that car.
Lower your sights and just get something that will get you from home to work. Once the bk is discharged, you'll have no problems finding financing.

[HHM]

I agree, that does not sound like a good idea.

Maybe use her as a co-signer, but don't have her borrow out of retirement (especially at 12%) just so you can get a car.

[bal_ny]

For the record, I agree with you both... I'd much rather leave her out of it. She's been pretty insistent, though, so I decided to look into it. I'm more than happy to suck it up and do 25% interest for 2 years on a cheaper car.

The problem is that only one finance company has said they'll work with me but I have to find a car that's under $5000, newer than a 2000, has fewer than 100,000 miles on it AND is available at the dealer they work with. It's proving harder than I thought. Finding a car for under $1000 that could pay cash for isn't panning out either.

[(((echo)))]

I'm trying to buy a reliable car before filing Ch. 7. Filing will happen early to mid-May.

At this time, I've been unsuccessful in finding a car that I can pay cash for, so I'm trying to finance something for under $5K. I've gotten one company to agree to financing me... the problem (other than the 25% interest) is that the dealer he works with doesn't have a car to fit the requirements of financing. He's looking for the right car but my nerves want this to be settled already.

My mother wants to take a loan on her retirement at 12% and loan me that money to buy a car (which would open up my car options). We would open a joint bank account, which would allow me to have the agreed upon payment direct deposited out of my paycheck bi-weekly. I would be responsible for paying back the full amount of the loan + interest.

Is this permissible? I know if it were a regular bank, I'd have no problem but does the fact that it's a family member screw me up? My lawyer's in court this morning and I was hoping to get an answer here while waiting until I can contact him.

Have you tried carmax?

[bal_ny]

I have tried everyone. The dealerships that guarantee financing weren't able to get it done w/o 50% down. If I do that, I'll lose the car... I have to owe near what the car is worth or it's vulnerable to being taken. At this point, continuing to seek credit will hurt me more than help me - that's why I want to go with the one guy who's approved me. That dealership doesn't have a suitable car, naturally, although they're supposedly looking for one *sigh*

Quite honestly, if knew for a fact that the car I'm driving now wouldn't be repo'd or die on me (the check engine light has been on for a few days and I really don't want to pay for a diagnostic) before this was all over, I'd wait until after discharge to line up another car. This is causing me more stress than it's worth.

[FreshLikeADaisy]

Actually, bal_ny, check your state's motor vehicle exemption before you conclude that the value on your (new?) car has to be almost equal to the loan amount. All you really have to do is ensure that the equity, regardless of the amount, will be covered by your available exemptions.

Trying so hard to zero out the equity may actually be *overshooting* the target and placing a burden on you that you need not carry. Add up what you have in motor vehicle and wildcard exemptions and go by that instead, if they are available to you. My understanding (and this may be old info, so check it yourself) is that NY has a $2400 motor vehicle exemption above and beyond any other exemptions you may have; that's half of the $5k you're trying to finance, if I read you right.

My apologies if you've already considered this; I thought I'd throw it in if you hadn't. I wish you well. Good luck!!!

[bal_ny]

Thank you. You're right... I can have a little bit of equity. I confirmed that today with my lawyer. I was so afraid of making a misstep, I was being a little too strict. BTW, I'm looking at used cars about 6 - 8 years old

And thanks also to everyone else who answered. You all confirmed that it was a bad idea. I appreciate it!

[keepmine]

I liked HHM's idea. Could your mom cosign?

[bal_ny]

Good question.
It would be a much better help, actually, because then she'd be helping me build my credit again. She wasn't crazy about the suggestion, though, and really pushed the retirement loan. Maybe now that my lawyer has officially told me not to do it, she'll reconsider.

[helpless]

Do you have Auto Zone or Advanced Auto Part Stores around you? They will give you the diagnosis code for free on your check engine light. I had one on on my van and went in there and found out that it was my gas cap. Son left it behind at service station and failed to tell me. I did all that worrying for nothing. It may be something minor. Good Luck.

[bal_ny]

Ooh! Thanks for that tip! I know the ABS system is bad so I *think* that's the cause, but it will ease my mind to know that I won't suddenly see smoke coming from under the hood.

[FreshLikeADaisy]

I was so afraid of making a misstep, I was being a little too strict...

Dang, you sound like me.

Good luck!!!