Some advice on a new car please.

[Brad20]

Hello everyone,

Some background on the topic: I am currently a full time student studying to be a firefighter/paramedic. I take anywhere from 16-18 credits a term and am finishing up both degrees by the end of next summer (2013) I've been in school for 2 years now and have been working my ass of to finish 4 years of school in 3. I work 60 hours a week (two 24 hour shifts and 1 12 hour shift). Although I do get to leave the station to attend class. All this said I don't have time for a part time job so that is out of the question. For the first two years I paid for school through loans (12k in debt now) but now I am on a full time scholarship from my department. I live at the station too so no expenses housing wise. Basically just food, phone, insurance. I am looking to buy a new (used) car with this years loan money ( around 5-6kin loans and 1400 in free grants) the car I want is around 11k, I can get about 3 for mine currently. I have wanted this car or a while now and I've been working so hard lately I figured I would reward myself. Before my last year is done and I get a job( starting pay for a ff/medic is around 50-56k a year) hence the reason I am not too concerned with being 20k in the hole. I have no other debt besides my loans. Any advice on my situation/car loan vs student loan would be much appreciated. I realize most of you are going to say wait until you get a job, but when I set my mind to something I do it. So please refrain from giving me the lecture. I'm almost 20 years old. thanks in advance for the advice. (all my work is volunteer, I make about 500 a month being a volunteer, just enough to cover food,insurance, cell, fuel, etc.)

[MonkeyMama]

If you don't want to hear any replies along the lines of "wait until you get a job," then you won't get any replies. That is the only sensible advice to give here.

[disneysteve]

I'm a bit confused. You are working 60 hours/week and have a full scholarship. Why would you still be taking out 5-6K in student loans?

You don't say what is wrong with your current car. Does it need costly repairs? Or are you just replacing it for the heck of it?

If you current car isn't worth keeping, I'd be looking to spend less than 11K. If you can get 3K for yours and put in another 4K perhaps, you can get a very nice used car.

You say you aren't concerned about going 20K in debt. I think you should change your mindset about that.

[Brad20]

For the sole purpose of getting a new car. I could run mine into the ground for the next year or so or sell it now. The current car I own isn't very practical for my profession either. I was in highschool when I bought it. So to answer your question no nothing is necessarily wrong with it. Looking to upgrade.

Perhaps my terminology was a bit ill. Going 20k in debt right now when I would be stepping into a profession that pays 50-56k a year within the next 2 years sits fairly well in my mind.

Logically I will most likely wait, i mainly wanted to get some advice on the interest rates and such for a car loan vs a student loan, given my current background and situation. Being young and such with little to no credit. Thank you for the input.

Edit: the 60 hours a week I work is all volunteer and covers my scholarship/part of degrees/free housing. I get around 500-600 a month if I'm lucky and am running calls all day/night while I'm on shift.

[auron]

No reason to repeat other responses, but to humor you:

Look into a late 90s early 2000s Honda/Toyota with 150k miles for $5k or less. Those cars will last to 300k miles assuming timing chain and transmission are in good condition (get them checked by a mechanic no exceptions) and proper maintenance (oil/filters/etc) is done.

[Christian321]

If you don't want to hear any replies along the lines of "wait until you get a job," then you won't get any replies. That is the only sensible advice to give here.

Agreed. You are putting the cart before the horse...

Secure the job before taking on more debt. I've never financed a car so I cannot be much help with APRs and such. I would take DisneySteve's advice and refrain from spending $11,000 on a car. Lots of good used cars out there in the $5,000-$7,000 range.

[Brad20]

Thank you for the input everyone. Always appreciated. My thought process is that if I am going to spend 5-7k on a car just to have a car, I would rather cough uP the extra 3-4k to get a car I want and will have for many years to come. Buying and reselling is always an option though. I will be paying for it eventually. However much more responsible with a career in the process.

[bjl584]

I sort of live by the mindset tht the financial decisions that I make should always be based on my current situation. By that I mean that you shouldn't buy a car now because sometime in the future you will be making good money. You most likely will make good money, but there is always a chance that something could happen and you won't. Like the others, I would wait to purchase a car until you have an income. Keep your current car until you finish school.

[disneysteve]

Another thing to throw out here - You are talking about using student loans to buy a car. Keep in mind that student loans are not bankruptable. If something bad were to happen, you'd be stuck paying for that car no matter what. If you need to borrow money for a car, much better to do so with a car loan. Don't take out one dollar more in student loans than you really need for your education.

I agree with Brian that you should base your decisions on your current situation, not anticipated or predicted future situation. That just leads to trouble if things don't go exactly as planned.

My thought process is that if I am going to spend 5-7k on a car just to have a car, I would rather cough uP the extra 3-4k to get a car I want

That only makes sense if you actually have the money to do so.

[YLTL_Dan]

I have wanted this car or a while now and I've been working so hard lately I figured I would reward myself.

...when I set my mind to something I do it. So please refrain from giving me the lecture. I'm almost 20 years old.

These two sentences are why most people are broke. We think we need to "reward ourselves" by buying crap and we think we know more than we do. I was in the same position as you 10 years ago, and that's how I went $50k into debt.

You're entering a very admirable profession where you will help many people. What if you came to save me, and I said, "Don't try to save me, I know what I'm doing" when in reality I was dying. Would you stand by and let me bleed to death or step in and save me (from myself)?

[Brad20]

You're entering a very admirable profession where you will help many people. What if you came to save me, and I said, "Don't try to save me, I know what I'm doing" when in reality I was dying. Would you stand by and let me bleed to death or step in and save me (from myself)?[/QUOTE]

Dan I don't see te logic behind your retort. That statement is just ridiculous. Thank you (everyone else) for your intelligent responses.

[cypher1]

You're entering a very admirable profession where you will help many people. What if you came to save me, and I said, "Don't try to save me, I know what I'm doing" when in reality I was dying. Would you stand by and let me bleed to death or step in and save me (from myself)?

Dan I don't see te logic behind your retort. That statement is just ridiculous. Thank you (everyone else) for your intelligent responses.[/QUOTE]

I believe he means if you have certain experience or expertise in an area (in this case financially) the person would probably be more inclined to take that advice than question it.

[kork13]

Brad, I'm just trying to figure out how you will make the monthly payments on the extra $8k in loans if you go that route? You're making $500/mo, which I'm guessing is fairly close to "just enough" to cover your present expenses. Where will the money come from to make those payments?

I understand that it's not what you want to hear, but I would strongly recommend you wait until your current car is no longer useable as reliable transportation, or until you can actually afford to buy a new car (you'll need a well-paying job for that). That's the SMART course of action for you, because it will allow you to keep your own money. If you buy a replacement car when the one you've got works perfectly fine, you're just wasting your money.

I'm sorry to be so blunt, but if you are going to insist on making a stupid decision against the advice of people with the experience to help you, there's really nothing we can do for you. (btw, that's what Dan was talking about -- making a stupid decision against the advice of an expert.)

To your original question of student loan vs. car loan: neither of them is a good option for you. You have no income to support payments on either of them. A student loan will be dragged out for years, and you'll probably still be paying it off when you get rid of the newly-purchased car, and as Steve said, it's not dischargeable in bankruptcy if something bad happens. A car loan is even worse, because without an income or credit history, they will either refuse to give you a loan entirely, or charge you an exorbitant interest rate (at least 10%-12% or more).

You're working to be a firefighter/medic, and for that you have my utmost respect. But please trust us when we tell you that nearly doubling your debt level right now in order to buy a car that you don't need is a terrible mistake.

[Joan.of.the.Arch]

Do you think that when you apply for and sign final papers for a loan you will read the entire thing, the "fine print" included? Of course we always should read a contract before we sign and assent to the terms.

I think you will find that the student loan contract limits you to using it for student expenses. Some students end up using their student loans to improve their general money situation, but that is not what student loans are for.

[disneysteve]

I think you will find that the student loan contract limits you to using it for student expenses.

Is that ever enforced? And how do they decide what constitutes a student expense? One could certainly argue that having a car is a necessity to attend school. I couldn't have gone to school without a car. When I was in med school, I had plenty of friends who used student loans to buy cars.