Author Topic: Guy asks for financial advice. AFTER getting a $13000 loan at 23.99% interest.  (Read 9028 times)

MrBuckBeard

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http://www.reddit.com/r/personalfinance/comments/2l80at/bought_my_first_dealership_car_and_dealing_with/

So, I came across this on Reddit's Personal Finance forum the other day.  He got a $13,000 loan (he originally said $10,000 turns out he already forgot the principle amount).  He works 60 hours a week (40 at one job, 20 at another), and his take home pay from all that is $1500.  Per MONTH. 

This loan is at 23.99%. 

If that wasn't bad enough, he seems to resist any notion of the fact that this was a bad move.  He says his pay is only "base pay" and he works a lot of OT.  On top of the 60 hours he's already working, apparently.  And he saves money because he doesn't watch TV (fantastic, but not enough) and because he "only eats two meals a day" (not so fantastic). 


swick

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This whole thread made me repeatedly shake my head. This right here is an excellent case study for what happens when BASIC financial literacy is not taught in schools.

gimp

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I just told the guy to sell the car, take the loss, and buy a much cheaper car. He won't listen but so it goes.

To be fair, swick, everyone else's responses are pretty good. So it's not the whole thread, just the OP in the whole thread.

swick

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To be fair, swick, everyone else's responses are pretty good. So it's not the whole thread, just the OP in the whole thread.

Very true, there are some good responses, I more just shake my head at the existence of the thread and the OP's continued denial that there actually is a problem.

Elderwood17

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Yes, the OP needed to ask for advice before stepping foot on the car lot!

MrBuckBeard

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I sort of feel sorry for him, aside from the fact that he doesn't seem willing to learn.  I mean, some of his questions just made me think he doesn't have any basic grasp of financing.

For example, someone told him if he knew enough about cars, then he should know not to finance an 8 year old vehicle and pay 23k for it.  His answer was:

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Well it's not $23k yet. I'm entitled to a refund of the finance charge. Could be 16k, could 18k.

I mean, it seems like just a fundamental failure to understand how this works.  His initial question wasn't even "Did I make a bad move".  His initial question was:

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How do I pay them? Do they take it out of my bank account? How do I do extra payments?
« Last Edit: November 05, 2014, 11:49:27 AM by MrBuckBeard »

Frankies Girl

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I'm sorry, I know overall this is awful of me but I just can't even get over the idea that the guy (that poor stupid kid) financed a MUSTANG for that much money. It's not even a reliable, efficient or safe car! It's a money-hemorrhaging douchemobile!

austin

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I was working overtime to pay for home and food before without a car. I'll gladly work overtime for all 3, and I don't generally do much with family and my hobbies have gotten boring over the years. I'd rather be asleep really.

This is just very sad.

slugline

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Um, the OP in that thread might just be a troll, too:

-- Claims $18K income working 60 hours/week between two jobs?
-- Says the dealership "looked pretty professional"?
-- Not directing such fundamental questions like "how do I make payment?" to where they obviously belong -- the lender or the finance person at the dealership?

I have a very hard time believing this is a real situation.

johnny847

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Um, the OP in that thread might just be a troll, too:

-- Claims $18K income working 60 hours/week between two jobs?
-- Says the dealership "looked pretty professional"?
-- Not directing such fundamental questions like "how do I make payment?" to where they obviously belong -- the lender or the finance person at the dealership?

I have a very hard time believing this is a real situation.

Addressing the income claim, it is possible if the reddit OP is talking about net pay as opposed to gross pay, absolutely no overtime, and minimum wage jobs.
$7.25/hr * 60 hrs/wk * 50 work weeks a year = $21750
Fed tax (I have not, however, included any possible credits. At that income though, with no children, one doesn't qualify for earned income tax credit): $1286
State tax (I ran the numbers for GA, my state) : $815
FICA: $1664
Net: $17985


I don't know, there are some really dumb people....I could believe that this is real.

tomsang

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I am not on Reddit, but someone should mention that most states have a 3 day grace blackout period. Maybe he can bring back the car under that.

Also he should go to a credit union and see if they can help him out.

Crazy!!

MrBuckBeard

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He's sadly not a troll.  3 years on Reddit.  All serious posts.  >12,000 comment karma.  And looking over his history, at least one of his two jobs is at McDonald's.  This guy's story and his reactions to the people posting, they're all real.

As for the 3-day laws, I already tried to tell him to take it back.  He doesn't think this is a problem at all, he doesn't think he screwed up, so he's not even trying to return it.  He's a happy camper with his decision.

dragoncar

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this was the worst part:

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Well to be fair to myself, I was working 12+ hours a day 6 days a week for a lot less pay then pretty much no pay come winter spring and fall, so it's really not anything I'm not used to. Grew up poor(Sub 15k family) and know not to throw my money at things that don't benefit me in the long haul(No alcohol, cigarettes, or drugs).
...
Plus it's more of an ideal car for me, it's the car design I always wanted.

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Honest question: do you have a desire to break the cycle of poverty in your family?

frugalnacho

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this was the worst part:

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Well to be fair to myself, I was working 12+ hours a day 6 days a week for a lot less pay then pretty much no pay come winter spring and fall, so it's really not anything I'm not used to. Grew up poor(Sub 15k family) and know not to throw my money at things that don't benefit me in the long haul(No alcohol, cigarettes, or drugs).
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Plus it's more of an ideal car for me, it's the car design I always wanted.

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Honest question: do you have a desire to break the cycle of poverty in your family?

I agree.  No alcohol, cigarettes, OR drugs?! What's the fucking point?

But seriously, it makes me sad to see that thread.  I have an unconscious and automatic reaction to pity and feel bad for the guy.  I know he dug his own grave, and isn't even smart enough to realize it, but it just makes me feel bad inside reading that.

MrBuckBeard

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But seriously, it makes me sad to see that thread.  I have an unconscious and automatic reaction to pity and feel bad for the guy.  I know he dug his own grave, and isn't even smart enough to realize it, but it just makes me feel bad inside reading that.

The orig poster's last reply just came in:

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Most the posts that were job related were while I was working for a 5 star restaurant 40+ hours a week, but I quit there, the hours were horrible, scheduling all over the place, and pay was abysmal. I moved on to McDonalds 20 hours minimum a week and people always asking me to cover their shifts, and a factory 40 hours a week that pays over time on Saturdays and double time on Sundays.
I get what you guys are telling me that I spent too much on a car and made a bad decision but it's really not killing me financially. I plan on working hard enough to pay the loan off in a year to a year and a half, and I will have the money to still afford my other essentials and missed work. I don't do much outside of work. I'd rather work than spend a day on my ass doing nothing.

That's just depressing.  And I can see clearly, he's overworked and underpaid.  So he's trying to do something nice for himself, and the way he does that is with a huge financial mistake in the form of an over-used Mustang at way too high a price and interest rate.

RWD

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I am not on Reddit, but someone should mention that most states have a 3 day grace blackout period. Maybe he can bring back the car under that.

Really? I don't think any state has such a law...
http://oppositelock.jalopnik.com/when-you-buy-a-car-the-three-day-cool-off-period-is-a-1616831555

MrBuckBeard

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"This is an emergency! I bought a used car Thursday and the engine exploded. I need to return it and don't know if my three days run out Sunday or Monday!"

Well, this quote alone tells me to disregard the rest of the article.  Because in Massachusetts, there ARE lemon laws.

http://www.dmv.org/ma-massachusetts/automotive-law/lemon-law.php

Covers both new and used cars.  Used cars must be sold in Mass, and cost at least $750 OR have under 125k miles.

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If your car meets these qualifications, you can either ask for a replacement or refund and the dealer is legally required to give it to you.

MrBuckBeard

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PS: Those lemon laws are not blank checks to get a car refund.  There has to be a defect.  But in the article, the guy's engine blew up.  That would certainly count.  So the point is, it really depends on where you are and what your local/state laws are.

gimp

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I want the car.

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AND I WANT PINK FUCKING PONIES

frugalnacho

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I want the car.

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AND I WANT PINK FUCKING PONIES


RWD

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"This is an emergency! I bought a used car Thursday and the engine exploded. I need to return it and don't know if my three days run out Sunday or Monday!"

Well, this quote alone tells me to disregard the rest of the article.  Because in Massachusetts, there ARE lemon laws.

The author of that article is a lawyer that specializes in lemon law. Returning a car under lemon law is completely different than a three-day grace period. If your engine blows up in the first three days they will just repair your car, not let you return it. Relevant articles by the same author:
http://oppositelock.jalopnik.com/how-do-lemon-laws-work-1606491159
http://oppositelock.jalopnik.com/when-your-brand-new-car-gets-a-rebuilt-engine-1643840327

mm1970

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I'm sorry, I know overall this is awful of me but I just can't even get over the idea that the guy (that poor stupid kid) financed a MUSTANG for that much money. It's not even a reliable, efficient or safe car! It's a money-hemorrhaging douchemobile!
Oh, I dunno.  My company President has a mustang.  I think he bought it when he finished his PhD.  He's had it since at least 2000, and I think it might be a 1998?  He drives like a maniac too.

BigRed

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I had a 1998 mustang from 1998-2008, it had only one relatively minor issue beyond regularly scheduled maintenance, and I only got rid of it when a large rock flew through the rear windshield and crushed the front dash and cracked the front windshield, causing the insurance to total the car (no one was in the car when this happened).  I enjoyed owning it, and it was very reliable.  So, don't knock the mustang.

MrBuckBeard

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I had a 1998 mustang from 1998-2008, it had only one relatively minor issue beyond regularly scheduled maintenance, and I only got rid of it when a large rock flew through the rear windshield and crushed the front dash and cracked the front windshield, causing the insurance to total the car (no one was in the car when this happened).  I enjoyed owning it, and it was very reliable.  So, don't knock the mustang.

He's right.  No need to knock the car choice, not when there's a 23% APR just BEGGING to be picked on.  I mean seriously, who does the equivalent of putting a car on a credit card?

NoraLenderbee

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It's sad because he obviously is hard-working and has the potential to do very well, but it's wasted because he just doesn't Get It.

MrsPete

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I'm sorry, I know overall this is awful of me but I just can't even get over the idea that the guy (that poor stupid kid) financed a MUSTANG for that much money. It's not even a reliable, efficient or safe car! It's a money-hemorrhaging douchemobile!
Maybe, but those of us who LOVE Mustangs LOVE Mustangs.  There's just something about them. 
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I was working overtime to pay for home and food before without a car. I'll gladly work overtime for all 3, and I don't generally do much with family and my hobbies have gotten boring over the years. I'd rather be asleep really.

This is just very sad.
Yeah, I felt badly for him when he said something to the effect of, "I just wanted a reliable car so I could get to work and not have to beg rides."  It would be frustrating to constantly wonder how you're getting to work tomorrow. 

And at least this guy has a work ethic.  At least he's not sitting back saying, "I can't work because I lack transportation." 

frugalnacho

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I'm sorry, I know overall this is awful of me but I just can't even get over the idea that the guy (that poor stupid kid) financed a MUSTANG for that much money. It's not even a reliable, efficient or safe car! It's a money-hemorrhaging douchemobile!
Maybe, but those of us who LOVE Mustangs LOVE Mustangs.  There's just something about them. 
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I was working overtime to pay for home and food before without a car. I'll gladly work overtime for all 3, and I don't generally do much with family and my hobbies have gotten boring over the years. I'd rather be asleep really.

This is just very sad.
Yeah, I felt badly for him when he said something to the effect of, "I just wanted a reliable car so I could get to work and not have to beg rides."  It would be frustrating to constantly wonder how you're getting to work tomorrow. 

And at least this guy has a work ethic.  At least he's not sitting back saying, "I can't work because I lack transportation."

One of his jobs is at mcdonalds though.  His priorities are all out of whack.

El Marinero

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It's sad because he obviously is hard-working and has the potential to do very well, but it's wasted because he just doesn't Get It.

Some friends of mine who are into extreme sports have a saying:
"Good judgment comes from experience.  Experience comes from bad judgment."

The Reddit poster made a bad financial decision.  Too many people are telling him that, so he seems a tad on the  defensive.

I suspect he will learn a lesson here.  Too bad the tuition for that is so high.
« Last Edit: November 17, 2014, 12:43:16 PM by El Marinero »