My father trashed my credit when I was a teenager. I’ve learned a lot about what a poro credit history can do to you.
You could be turned down for employment as others have mentioned. If you ever want an apartment on your own that could be a problem. If you ever need to finance another car or get a school loan, credit card or mortgage you may be screwed by a bad credit report.
Here’s another thing to consider. Really bad crap stays with you seven years. The start date of that seven years is when the loan company officially considers you written off as a loss. The account could sit as a black mark in collection for a couple years even after the reposession so that seven years could easily become more if your account ends up floating through a couple of agencies.
Maybe you can get one of those smarmy we take any trade and pay off whatever you owe deals where you get a new car and can lump the old debt in with the new?
I do also recommend a different mechanic’s opinion. I’ve had headgaskets done before and unless they have to replace EVERYTHING in there it shouldn’t be anywhere near that to fix!
I still don’t believe the $1500 for a head gasket, while there is labor involved it’s not that bad on the majority of cars I’ve seen. Granted if you take it to a dealer you will get hosed, take it to an independant shop, ask around and see where people take their car.
I’m in the DC area and I’ve seen a few people get new head gaskets and they only paid in the 400-500 range with milling of the head. You have to shop around though.
If you can find one of those “drive it push it or drag it in even if you still owe we’ll give you $500 for it (and put what you still owe on the new loan probably at high interest)” deals, that may be just the thing.
Sure you’ll be paying a lot overall, but you’ll be driving a brand new car, and as long as you can make the payments who cares if it takes another year or so to pay off.
Others have already mentioned some of the ways bad credit will affect you.
Here’s another – insurance. That’s right, these days insurance companies run credit reports on applicants.
I am also (like so many others on this thread) clearing up bad credit. I make great money and have no other blights except the bk from my exhusband. Doesn’t matter – I’m tainted goods now. And that’s true even at my salary range. Fortunately I can pay cash for most everything.
It sounds like you are looking for quick relief – just make sure the price you pay for that relief is worth it.
Speaking as a landlady, letting your car get reposessed is a really bad idea, if you can possibly avoid it. Almost all rental owners run credit checks nowadays. A bad tenant can potentially cost thousand$ in losses (believe me, I know), and once there is any sort of major red flag on your report, many landlords won’t consider renting to you. My husband and I might still consider renting you a place if you make a good impression on us and show signs that you’ve gotten your act together, but lots of landlords will reject you out of hand for years to come. It ain’t worth it.
Thank you all for the excellent feedback. I had no idea my credit history would be important in such matters as rent or job opportunities (or even relevent for that matter). Judging from the replies, I think I’ll finish paying off this loan. I’m especially grateful to the people who have personal experience with this for letting me know what a big mistake I was about to make.
I do have one question I would like to ask though. Many of you base your replies on the assumption that loans and credit will be necessary in life. What I would like to know is, is this really true? I personally don’t believe in credit. I have refused all offers for credit cards and student loans. I would not even have this auto loan if I had known better at the time. Is it possible to get through life without having to borrow money or am I missing something?
P.S. I had intended to ask about the credit aspect of my situation so I didn’t even consider the car issue. For those that are curious, I have a 1995 Dodge Stratus ES that I purchased used about 2 years ago. The water pump had failed on me and the gasket followed. I’m going to try checking with a independent mechanic to get a second opinion. From what I understand, the majority of the cost is for labor but I don’t really trust a estimate from a dealership.
I got burned pretty bad by the dealership that sold it to me. I paid $9000 for what I found out later to be a $4000 car. I’m not even sure if that was the blue book value at the time. From the very beginning, it has been nothing but problems. Take my word on this and never, ever buy a dodge. Their resell value goes down quickly and you end up spending a great deal of money on repairs that wouldn’t be necessary with any other brand. I’m sure other Dodge owners know what I’m talking about here. Anyways, thanks for listening to me rant for a little while against Dodge :).
Yes, you can, but it may not be a wise financial decision, depending. Consider this: you want to finally buy a house. The only decent houses in your area are $150,000 or more (in some areas, that’s conservative). How long would it take you to save that much money, and could you possibly have made more money than the loan amount by investing? It’s tricky, and I’m with you in how much I hate loans (we are very aggressively trying to pay off our mortgage).
But another case: True Story. December 26, 1999, we’re in a car accident in Arkansas. Car is completely totalled (other driver’s fault). The car, a 1995 Dodge Neon, had been paid off for about 6 months. We start the process of looking for another car while we wait on the insurance check. We had about $7000 in savings, and the car amount came to about $5000.
We decide on a truck, a nice big truck. We look at used, but used trucks around here don’t depreciate very much. But the worst of it was, because we had almost no credit (but what we did have was good), the dealerships wanted to offer us interest rates of 19%! Even though we were putting down $12,000. No way were we going to consider that.
So we look some more, and we find the dealership we end up going with. They were willing to offer us their best interest rates (3.9% for 3 years) because we put down half of the vehicles value. We ended up with a brand new, 15 miles on the odometer, silver F150 XLT. We paid it off in January of this year. Our total interest for 3 years was $800. Essentially, we borrowed their truck for 3 years for $800.
Another story: After 6 1/2 years in apartments, we decide to get a house. Our credit by this time was considered impeccable, because of the car we’d bought a few months earlier (and always made payments on). Lenders were offering us insane loan amounts, and getting a loan was as simple as taking care of all the paperwork. We got the best interest rate possible at the time (7.25% was very, very good then) and a 15-year loan on a house that was within our means, not the lending company’s (as I mentioned, we don’t like to be in debt).
So I guess the moral of the story is, sometimes you really need to use credit ,so it pays to be careful with it, but the less you need of it, the better off you’ll be.
You also never know what is going to happen in the future… yeah you don’t want to be in debt but it is awfully hard to buy a home without a mortgage (at least around here and for us) where starter homes are 200,000.
Even if the possibility of not getting an apartment, job, credit cards, insurance for your car and other things mentioned above don’t daunt you into keeping your credit record clean…
What if something nefarious happens and you simply need to borrow money (even short term while you wait for an insurance check to be cut) Say you buy that house for cash and the roof caves in… life is full of surprises…
I’d love to have no debt… unfortunately that isn’t always possible for all people at all stages of their lives. Good luck to you though!!
You may want to consider getting exactly one credit card. If you ever need to rent a car, you won’t be able to use your debit card, you will need an actual credit card. Plus should you get stranded for some reason you won’t be without resources.
I keep one credit card. I charge a small amount every month and pay it off in full every month. The credit card company has increased my limit three or four times although I never use the full amount. I am not getting in that pit again!
You don’t believe in credit now, but are you so sure you won’t believe in it in 7-10 years? That is a long, long time to have a huge stain on what is, for all practical purposes, your Permanent Record.
Like we said, even if you’re not planning on getting out the Visa and having a party, you may need the men in the nice suits at some point.
I’d say it’s possible to get through life without having to take any loans out but NOT without having a credit history. Even if you never borrow, you need a decent credit history, in many cases, to get an apartment or a job.
Anyway, unless you are independently wealthy, you will almost certainly have to borrow in order to buy a house. You say now you won’t ever want to own a house? I know a lot of people think that way, and I am sure renting works out for many people for a long time better than buying would, but when you are 70 years old and on Social Security, it would sure be nice to know that you are living in a paid-off house and not have to be sick with worry that you cannot afford your rent on SS income alone. If nothing else, that’s one reason to buy some residential property while you are fairly young - so you don’t have to worry about being homeless when you are old and alone. And you will probably have to take out a loan to do so.
I’m curious, cletus. If you hadn’t gotten an auto loan, how would you have paid for your car? Could you have payed cash, or would you have just gone without?
As an additional thought, let me echo what Contrary said about obtaining exactly one credit card. Having a record of a good credit history is better than having no credit record at all, so occasionally using a credit card, and esablishing that good record, over a long period of time, might help you down the road.
As to getting through life without ever taking out any loans…I dunno. It’s possible to do, I suppose. Long-term loans are basically a way of shifting your costs from a time when you’re younger and relatively poor to a later time when (hopefully) you’re richer) If (as you implied) you’re getting through school without taking out any loans then you’re well on the way to the goal of avoiding loans. If you can save enough to pay cash for a vehicle up-front, and don’t plan on ever buying a house, then you might never be in a situation where you need to shift your cost to later. Still, it seems wise to me to do some relatively painless things now (like getting a Visa card) just in case of future emergencies or changes of plans. YMMV, of course.
Sorry it took me so long to reply, I’ve been away for a little while.
Contrary, I will give some thought to getting just one credit card and building up a credit history. I guess if I’m careful then I’ll be okay but I still hate the concept of credit. It seems like everything in today’s society is dependent on it. Getting a bad mark is like getting some kinda fricking scarlet letter or something.
missbunny you make a good point. I don’t want to be paying rent on a apartment when I’m 70 and living on a fixed income.
zut at the time I got this loan I was working and lived with my parents(gave me a ride too). I figure I could have saved up 2k - 3k and gotten a used car. Now I regret that I didn’t but, oh well.
I’ve decided to pay off this loan and keep my car but the question now is, what do I do with it? I don’t want to fix car because it is not the only problem it has. I would hate to spend $1500 just to have it die from something unforseen. I’ve been thinking of just selling it to a salvage yard but I believe I need to wait until the loan is paid off(?). Other then that I guess I’ll start saving for another car. Maybe a nice, reliable Toyota this time.