So...time for a new car?

[ohiogal]

Hi all!

Filed for bankruptcy in 2010, mostly for CC debt and a house that ate all my money, to the tune of about $50,000

One thing I did was reaffirmed my car. Wells Fargo, the company that had the loan, offered me 8% interest on the remainder of the loan. My payments went from $400/mo to $280. Yay!

Last month I made the final payment, so I now own the car.

Now the question: the car is a 2004 Subaru Forester with 115,000 miles on it. I've been contacted by my Subaru dealer offering me a lease with possibly $0 down for a new 2014 Forester. The car dealers all have great deals going on because they want to get rid of their inventory before the end of the year. I told him I can't pay more than $280/mo for a car, and he has assured me that that's doable.

Should I bite? I'd rather buy than lease, but it's going to be a while before I qualify for good loan terms with a bankruptcy only three years old. My current credit score is 699.

Does leasing a car do anything for my credit? Should I hang on to the car? It needs some work (mostly leaking hoses, and a new catalytic converter but I'm not replacing that, those things are $1200!!), and my big fear is that I'll be driving along in this northern Ohio winter and the thing will just quit on me. It IS almost ten years old.

On the one hand, it would be nice to have $280 extra a month for a while; on the other, I worry that I'm playing Russian Roulette by driving a car that's nearly 10 years old and could have something major go bad at just about any moment, ruining its trade-in value (the only thing I have to put down on a car at this point.)

So...go for leasing a new car or drive the old one and cross my fingers? Thanks for any input!!

[Blossoms]

Hello from a fellow Buckeye! I'm in the Cleveland area! : )

I don't know enough about car mechanics, to comment on how long your current car might hold up.

But I'd be really surprised if you couldn't finance another vehicle at a very good interest rate, given that you have a nearby 700 credit score, and your bankruptcy is already 3 years old. Especially if you've reestablished credit.

If you do decide to finance another vehicle, why not try a local credit union? You'd probably do much better interest rate wise through a cu, then through a finance company.

[Blossoms]

Plus, I've always heard that one needs better credit to lease, than to buy. I personally wouldn't lease unless I planned to get a new vehicle every couple of years. It seems that if someone wants to keep a vehicle long term, that buying is a better option.

[frogger]

Hi all!

Should I bite? I'd rather buy than lease, but it's going to be a while before I qualify for good loan terms with a bankruptcy only three years old. My current credit score is 699.

Thanks for any input!!

I don't know where you got the information that you won't qualify for good loan terms, but you should have no problem getting a 5 year note at under 3% interest. If you find what you want at the payment you want, the car dealership can get you approved with one of their many sources.

[tobee43]

we went via cap one auto. i got 38k in about 2 seconds after applying. although it was at a bit over 5%. in our situation the dealer on this car anyway wasn't much better, plus we pay off early and never feel the bite of that 5%. i think we got our car in june and i have the balance down to less that 5k at this point. we wouldn't even consider leasing. you really need to look at the pros and cons. we stand clear, but for many liking to lease it may be a good way to go. i would still buy as oppose to lease.

cap one is bk friendly if you can't find a dealer that will work with you. best of luck with your new car!

[ohiogal]

Thanks everybody! I just figured I wouldn't qualify for a loan because my bankruptcy is recent, but I guess maybe that's wrong? Also, that the payments would be higher with buying vs. leasing and that I'd have to put money down in addition to a trade-in. I'll check with the dealership and see what my options are. Thanks again!

[bcohen]

Why buy a new car now? A Subaru is a reliable, Japanese-built car, and should easily last for more than 200,000 miles with proper maintenance. Other than the battery going out--which can happen on ANY car, especially during the winter--I don't see why you should have any problems. I drive a 2004 Toyota Corolla, and like yourself, I constantly get solicitations in the mail from our two local Toyota dealers to trade this in and buy something new. Why would I want to do that? With proper maintenance, I can reasonably expect to drive this one for another 10 years.

My advice is to keep your car and SAVE YOUR MONEY. That means set aside some money for the inevitable repairs and wear items such as tires, battery, and so on. If your model uses a timing belt, as opposed to a metal chain, you should have had it replaced at 75,000 miles. If not, do it now! It costs about $400 to have changed, but is far cheaper than a new engine, which is what you'll need if the belt breaks while you are driving. Likewise, if your model has an automatic transmission, you should have had the transmission fluid changed at an interval specified in your owner's manual, and there is usually a screen which is cleaned or replaced when that is done. I believe for most cars, that should be done at 75,000 miles as well.

[tobee43]

bcohen: we were a "subaru" family for years and years and YEARS!!! (we also owned another brand we still have), we had; i swear had over 300k miles. it was an old 3 cylinder 4 wheel drive that never died!! however, the last one brought brand new i can think of the name but is was a small cool little pick-up. (i guess i want to forget). but we had such problems we got rid of it in a years time. it was not made in japan anymore. we still miss the and maybe they have gotten better since then.

once a car starts eating you up with repair bills is when we think about buying new.

[ksgirl38]

I'm not sure why you would consider a lease when you own your car now. Not to mention that it sounds like you can get a lot more out of your current car. Any dealership will tell you that they'll match your payments, it's just how long they are going to stretch it over is the question.

[TXskyblue]

2004 Subaru with 115K should still have a lot of life yet. If you can get what you consider a good rate now, you can probably get the same or an even better rate later.

Since you don't have a car payment now, why don't you put a little money into the car (fix the CC and whatever else)? You said it's Russian Roulette but I think it's relatively low risk. Nothing is risk free, not even a new car.

My thought is that you are budgeting on car payment and not looking at total cost of ownership. Driving what you have now should save you a ton of money and allow you to save up some serious cash which you could use on another vehicle at some period in the future.

Your username says Ohio so the salt on the road may make a difference. I know that messes up the frame, but having lived in Texas my whole life I don't know too much about that. Someone from a snowy climate would likely know better.

[LadyInTheRed]

Here's some info on the reliability of your car. http://autos.msn.com/research/vip/Re...model=Forester

The catalytic converter is the only thing that seems to be a common problem. According to the above link, it shouldn't cost $1200 to fix. Even if you do have to put that much into it because of the other work needed, it is a better financial decision than buying a new car. Instead of getting a car payment, replace the CC and hoses and keep up the maintenance. You'll get many more miles out of it. Remember, a new car will also have higher insurance premiums.

If you really feel you need a new car, don't lease. As already pointed out, you should be able to get decent loan terms with your credit score.

[bcohen]

I just wanted to add that leasing a car is NEVER a good investment, and even buying a new car is seldom a good idea. Having a car which is paid-off, and does not require monthly lease/loan payments or costly full-coverage insurance will always save money in the long run, even with the occasional repairs that an older car needs.

[LadyInTheRed]

I just wanted to add that leasing a car is NEVER a good investment, and even buying a new car is seldom a good idea. Having a car which is paid-off, and does not require monthly lease/loan payments or costly full-coverage insurance will always save money in the long run, even with the occasional repairs that an older car needs.

So true. And even when the old car gets to the point where it needs to be replaced, it's better to buy a car that is a couple or a few years old than to buy a new one.