Hindsight at 20/20, there are a few things one could learn from my car buying experience. For me, luxury car meant seven year-old VW Jetta. After driving one that belonged to my friend and knowing my old Buick was breaking down, I went to the closest dealership to my house and said “yes” to everything the man said including, “Oh, those scary electrical signals will just go away if we buy you a new battery.” I took whatever I could get because I was amazed I could even get a car with my credit. I did not know then that it may have been worth it to take a interest rate of something like 20% if I had to, because I could easily re-finance for a better rate with another company after just three months of solid payments. (Editor’s Note: Or use Prosper for the Car Loan) What actually happened is that I paid that ridiculous rate on time for exactly a year before I even knew I could re-finance.

This was obviously before I had any sense of finances, interest rates or FICO scores. I found out about four months later when I went to open a airline credit card that the used car dealer I went to had tried to get me the “best rate” by letting ten different financiers check my credit. Each of those inquiries show up on my credit report and I looked desperate to lenders.

Through the first year of owning the car I had four unsuccessful repairs at Volkswagon dealerships and other shops. Each would get rid of the engine misfires telling the car’s computer strange messages in bright red on my dashboard- for only days or a week before it would come back.  In the state I bought the car, like in most states, lemon laws do not apply to used cars. (If you do have a new car that is a lemon or may prove to be a lemon, send an immediate notice to the manufacturer to document each repair.)  It doesn’t seem to be unsafe, but it does cause cause me grief and anxiety. I would trade it in or sell it, but I of course paid more for it than it was worth, of course, and now I would lose thousands of dollars on it’s sale. And with it’s obvious engine problems, I am not likely to get a very good deal.

So my only option was to re-finance for a much lower interest rate (they say even a rate of two percent lower than what you are currently paying may be worth it), and have a smaller payment while I put money into finding someone who can fix the problem, and will hopefully be willing to help me force my warranty company to pay for it. If I can get the car to start acting normally, and my credit score continues to climb, I will trade it in for something cheaper to fix. Another option would be to pay off the car as soon as possible if you have funds from somewhere else, obtain the title and then sell the car for full private party amount which will bring you the most value.

Be careful. Shop around.  Know that even if you have bad credit, your business is worth something to the sellers. Do not consent to letting a dealer shop around for rates with more than two financiers. Know your credit standing (FICO score) before you buy. If your credit score has been climbing, even a little, then do re-finance after 3-5 months, especially if you have been otherwise working on improving your credit. Here is the Low Down How-To from CarBuyingTips.com

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Moorea Malatt writes with QueerCents LGBT financial blog.
She is a folk musician, performance artist and Certified Life Coach.
www.mooreamalatt.com
www.queercents.com

The other day, I went to my first Debtors Anonymous meeting. I know, I should remain anonymous, but this stuff is just too helpful not to share! I am only outing myself here. So, I definitely realized, after five minutes that I certainly do need to be in this twelve step program for self improvement, but I also realized how lucky I was that I have fairly little debt comparatively and also that I am smart enough to know just how I will go about getting out from under debt. It turns out; I just needed the little reality push of knowing I need help!

In that very first meeting, it finally sunk in that I must get out from under some of these high interest rates. I got these cards after my car dealership had made my credit report look screwy as they made way too many inquiries finding me a good rate (more on this in another post!). Later, I was rejected by better cards with lower rates when I needed money fast for a creative project- the making of the third album of my songs. Somehow, my creation felt urgent enough to accept an interest rate as high as 23%!

I was using credit cards for years in order to establish any credit history at all, being a young person. My department store card was the first recommended for this purpose. But I am what Debtors Anonymous calls an “under-earner” and so I have been paying off my cards slowly, sometimes only the minimum for about nine months and only recently did it occur to me that this is ridiculous and there must be another way.

The way, for me, it turns out, is to be my own loan consolidation officer, in a way. I have had good luck with credit union loans and their low interest rates and so I will be taking out a fixed loan in the exact amount that will immediately pay off my multiple debts- canceling those accounts and leaving me with one low-rate loan payment and my car payment. Two things to deal with instead of five (Dept. Store Card, Visa, Personal Loan, A Hefty Medical Bill and Car Payment). (Editor’s Note: A Prosper personal loan can be an excellent source of a debt consolidation loan.)

These high interest rate accounts will be paid off and fade from my credit report. I only have one payment of general debt under a rate of 12 percent and my one car payment. My next step after improving my credit this way over the next six months will be to re-finance my car payments for a lower rate too. (Editor’s Note: Prosper loans can also be used for auto loans, for an example see Refused by Credit Unions, Yes by Prosper.)

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Moorea Malatt writes with QueerCents LGBT financial blog.
She is a folk musician, performance artist and Certified Life Coach.
www.mooreamalatt.com
www.queercents.com