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Ok, this is as much about parenting as it is about money... How far do you go to help your kids?
I feel I failed as a parent, but I was outnumbered three to one. Two daughters, and a now ex-wife that wanted... stuff.
Here's the skinny. I bought both of my daughters their first, basic, used cars as my father did for us kids. Recently, I got a text from my ex asking if she could borrow a few hundred bucks (we are still friends). I actually have great respect for her work ethic and just being a great mom... she's just -not too smart- but works like hell.
Knowing her history, instead of sending a check I booked a flight and replied to the text... I'll see you Tuesday.
As it turned out my daughter "hit a curb" and "broke the axle". Mind you this was a Toyota Corolla that she drove to the repair shop to get this diagnosis.
Mom and daughter went looking for a replacement car (without telling me what happened) and found a 2005 Ford Focus wagon that my daughter really liked.
"How much will the payments be?" They asked.
The slimy used car salesman saw dollar signs...
The car books for ~ $5,000.
They signed the paperwork to buy it for ~$7,200 financed at 29% interest for a total of over $12,000 by the time the last payment is made!
And this **** seems to be legal. (?)
The stupidity is legendary.
I went out there thinking I could co-sign and re-fi at a better interest rate. Nope. It's financed for more than the car actually worth so no bank/credit union will touch it.
Ok, this is as much about parenting as it is about money... How far do you go to help your kids?
I feel I failed as a parent, but I was outnumbered three to one. Two daughters, and a now ex-wife that wanted... stuff.
Here's the skinny. I bought both of my daughters their first, basic, used cars as my father did for us kids. Recently, I got a text from my ex asking if she could borrow a few hundred bucks (we are still friends). I actually have great respect for her work ethic and just being a great mom... she's just -not too smart- but works like hell.
Knowing her history, instead of sending a check I booked a flight and replied to the text... I'll see you Tuesday.
As it turned out my daughter "hit a curb" and "broke the axle". Mind you this was a Toyota Corolla that she drove to the repair shop to get this diagnosis.
Mom and daughter went looking for a replacement car (without telling me what happened) and found a 2005 Ford Focus wagon that my daughter really liked.
"How much will the payments be?" They asked.
The slimy used car salesman saw dollar signs...
The car books for ~ $5,000.
They signed the paperwork to buy it for ~$7,200 financed at 29% interest for a total of over $12,000 by the time the last payment is made!
And this **** seems to be legal. (?)
The stupidity is legendary.
I went out there thinking I could co-sign and re-fi at a better interest rate. Nope. It's financed for more than the car actually worth so no bank/credit union will touch it.
Opinions.
Most states don't have usury laws with a rate cap below 29%, in fact, I'm not sure if any do. Some states hardly have any usury laws at all - that's why you see payday lenders and the like.
In my home state, the cap is (IIRC) 36%.
Once the documents have been signed, it is what it is.
Do they have any available credit on credit cards or credit lines at less than 29% interest? The debt could be moved.
Since the car is only financed for $7200 which is relatively low you could co-sign a loan for your daughter for the worth of the car ($5000). You daughter can put the rest on a credit card ($2200) below 29% if she has the availability. Or you can front the $2200 for her and make her pay the extra payments to you.
$7200 at 29% is $228/mo 5 years.
If you refi at 2.99%..
$5000 at 2.99% is $89/mo 5 years. So she can pay you $140 a month or so a month until she's paid you off. I think the goal of your post was to find a way out of your loan and that doesn't seem possible. So this is another alternative.
Look, I understand your effort to help here, but you're essentially dangling on the edge of a cliff, grasping to hold someone who insists on holding onto a full bedroom set. They won't let go of the very thing that threatens them.
IF (and I can't emphasize IF enough) this was someone I truly thought was going to get their act together, the answer is simple. Take out a personal loan to cover the difference of the loan vs value(so if the car is worth $3k and the loan is 5$, borrow $2k). That will let you pay down the loan to the point where it should be "touchable" by other car loan offers(PenFed is great for this by the way, I suggest you check them out. Anyone can join with a little research).
That will give you an unsecured personal loan of $2k at about 10-15%, and a normal car loan at 2-5%. No where near the Loan Shark rate you got.
BUT!!!!!!! You better not do this. They're obviously unreliable when it comes to finances and attaching your name will put you on the hook for a lot of things you probably don't want to be involved in. Make them do it. Honestly unless they declared bankruptcy this year, they can probably get an unsecured loan at 10%. 29% is insane.
I respect your efforts to do the right thing... but there's no point in jumping to the helm of a sinking ship. It's already going down.
Thanks JEO123, et al.
I already knew the answer when I asked the question. I just needed some reassurance. It tears me apart to withhold help from my kids.
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