Michelle My Bell Posted March 31, 2012 Share Posted March 31, 2012 (edited) NOTE: If I sell the van, I will still need to use the money from the loan to pay for another car since the van isn't worth much. I am starting college this fall and I own a full size van that is a major gas hog. I was told I could get $3000-$4500 student loan in addition to my grants. My grants completely cover the cost of the schooling so I don't need loans for them. I have no savings and no credit as of right now. The van is completely paid off but it is older (1999 E-150) and not in great shape. In fact I have had it in for a lot of repairs this year alone. The school is about 20 minutes away so I contemplating getting a small car or a bigger car/minivan that can hold all 6 of us. The van is nice because it is roomy and some of my kids are bigger. Please help me decide the best plan... Edited March 31, 2012 by Michelle My Bell Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted March 31, 2012 Author Share Posted March 31, 2012 I would love your written thoughts as well!:001_smile: Quote Link to comment Share on other sites More sharing options...
Renthead Mommy Posted March 31, 2012 Share Posted March 31, 2012 Well when I got my studen loan, there was a part in it that specifically stated it could NOT be used for a car loan. And something about if it was found out it was used as a car loan it had to be paid back right away and there were extra fees or charges or something. Quote Link to comment Share on other sites More sharing options...
Meriwether Posted March 31, 2012 Share Posted March 31, 2012 I'd work toward getting a more fuel efficient vehicle, but I wouldn't spend the loan money for anything that wasn't absolutely necessary. Could you find somebody to carpool with? I know money is tight right now. I'd just hate to see you going into debt over a vehicle if there is a way to scrape by now. Quote Link to comment Share on other sites More sharing options...
Mandylubug Posted March 31, 2012 Share Posted March 31, 2012 my opinion, you can't justify debt to save in gas money. If you are determined to take the loan money; I would sit on it for emergency expenses such as a van repair. More than likely a repair to the van would be cheaper than purchasing another used car. Being that you won't be purchasing a very new car with that amount of money and the fact that it too will need repairs here and there... you are trading an apple for an orange. Legally, you are not supposed to purchase a vehicle with student loans. Quote Link to comment Share on other sites More sharing options...
StephanieZ Posted March 31, 2012 Share Posted March 31, 2012 Whatever one, cheap, beater vehicle makes the most sense financially. I can't tell whether a new car would replace the van, as you have a lot of kids. :) If you can get a fuel efficient car that will replace the van, then go for it. Get it as cheap as you can, no bells/whistles. Add up the year's costs for the various options (insurance/payments/interest on loan/gas) and then make your choice. If you'd save $ overall with a new car, go ahead. If not, don't do it. You have to pay back those student loans someday, and they add up quickly. Don't borrow more than you need to survive through school. If you NEED a new car, go ahead. Dh & I will still be paying back our own student loans well after we've finished paying for our own kids' undergrad. 25 year payments on one of the loans!! I don't regret the loans, and we're in much better financial shape b/c of the educations the loans made possible, but those payments are larger than our MORTGAGE and will be with us until we're at retirement age. No debt should be taken lightly! Quote Link to comment Share on other sites More sharing options...
Renthead Mommy Posted March 31, 2012 Share Posted March 31, 2012 Legally, you are not supposed to purchase a vehicle with student loans. This is what I thought, but I couldn't remember if it was truely illegal or just a rule that you could not use student loans for car loans. Quote Link to comment Share on other sites More sharing options...
Danestress Posted March 31, 2012 Share Posted March 31, 2012 Can you site the law prohibiting this? I think a car can be a valid expense that a student loan can be used to cover. However, the thing to remember is that student debt has to be repaid. You can't just declare bankruptcy. So let's consider a really bad case scenario. You take out a student loan, use it for a down payment on a car, and have an additional small loan on the car. You finish school and can't find a job. You still have to make the car payments, but you can't. Your car gets repossessed, sold, and the earning applied against the loan balance. So now you have no car, and hopefully no car loan. But you still have the student debt. I would be careful. Quote Link to comment Share on other sites More sharing options...
Princess Peach Posted March 31, 2012 Share Posted March 31, 2012 I voted to keep and use the van for school. I wouldn't use a student loan to buy a car. Quote Link to comment Share on other sites More sharing options...
JudoMom Posted March 31, 2012 Share Posted March 31, 2012 I voted to keep and use the van for school. I wouldn't use a student loan to buy a car. :iagree: Quote Link to comment Share on other sites More sharing options...
Audrey Posted March 31, 2012 Share Posted March 31, 2012 Don't take the loans unless it is a dire necessity. The rates are terrible and you'll be paying them back forever. Once they get you hooked on taking one loan, they'll pressure-sale you to take more. SL's are a cut-throat business. They are NOT a friendly lender AT ALL. You'd be far better off going to your bank and getting a car loan. ETA: However, I voted to keep the van and forget the car. It makes the most frugal sense to me. Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted March 31, 2012 Author Share Posted March 31, 2012 I need to add in more information. I would be paying back the loan next Feb. with my income tax return. My van is not in very good shape and I worry that it will break down with heavy driving. I drive very little right now (only about 2-4 times a week very locally) and it has broken down 3 times in the last few months with repair costs being $250-500 each. I do think that keeping a vehicle that is owned outright is best in most situations, but I am leaning towards getting something new for the previous reason. Also, gas costs in my van are really high and a full size van is very expensive to drive. Quote Link to comment Share on other sites More sharing options...
Teachin'Mine Posted March 31, 2012 Share Posted March 31, 2012 I would love your written thoughts as well!:001_smile: :lol: No idea on whether it's best to use a student loan or a car loan, but reliable transportation, with better gas mileage, would definitely be a positive. I'd probably go for a minivan with decent mileage which you can use as a family, instead of the smaller car just for commuting to school. Quote Link to comment Share on other sites More sharing options...
regentrude Posted March 31, 2012 Share Posted March 31, 2012 I need to add in more information. I would be paying back the loan next Feb. with my income tax return. . Why are you getting such a big tax return? I would adjust the withholdings so that you have the money available during the year, not let the feds have it interest free and "save" it for you. Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted March 31, 2012 Author Share Posted March 31, 2012 Why are you getting such a big tax return? I would adjust the withholdings so that you have the money available during the year, not let the feds have it interest free and "save" it for you. Because we are in such a low income bracket we get child tax credits and other things. Quote Link to comment Share on other sites More sharing options...
nova147 Posted March 31, 2012 Share Posted March 31, 2012 Can you adjust withholding to keep more of your paycheck? Raise funds another way - garage sale, side jobs, etc? I would avoid the debt if at all possible. Obviously, the van situation is problematic, especially with the repair costs. But February is far away, and things have a tendency to come up, kwim? Maybe you can find an older used car to drive to school for $1000-$1500 (depending on your area) while you save more and/or get your next tax refund. DH borrowed a lot for living expenses while in law school, then took a govt job that paid 1/4 of what he would have earned at a firm. So his plans to pay that loan back fast didn't work out. Ten years later, a recession plus 4 kids and too much house has left us unable to pay that loan. Not worth it. Quote Link to comment Share on other sites More sharing options...
susankenny Posted March 31, 2012 Share Posted March 31, 2012 I voted if there is no other way, then get a small car with the loan and keep the van. My student loans were 5%, but I'm not sure what the rate is these days. I didn't feel pressure to get more loans and they did not treat me badly. I had to attend a class on campus that explained what I was getting myself into. Then I applied & received the check in the mail. When I graduated, I locked in my rate & paid it back. If anything, getting a loan was too easy, and that in itself can be enticing when you need money. However, if you are disciplined enough to only buy a small compact car and truly pay it off next year, I'd say you will be fine. Susan Quote Link to comment Share on other sites More sharing options...
magnificent_baby Posted March 31, 2012 Share Posted March 31, 2012 I'm sure you have thought of this already, but wanted to mention just in case. Have you looked into online classes? I just graduated, and most of my classes were online. Some through the community college, and the rest through my specific degree program. That would save a lot of money on gas. Quote Link to comment Share on other sites More sharing options...
homeschoolkitty Posted March 31, 2012 Share Posted March 31, 2012 No car, no van, no loan no headache. Save about $500 , you can do that, a teen can do that. then buy a bit up old car and use it for the commute. A good mechanic told me about my 1981 car, you are OK if you pay about $200/mo in repairs.... as in any lease you'll pay that much and you don't own the car. so far it is one or twice a year that I had to pay that much in repairs.... it holds my 3kids in carseats, and my hubby and me... it is a honda accord. Find yourself a Honda or a toyota, 4 door. they may not have ac, (mine think it does) but we can move the fam. and we owe NO ONE. Why?, we just got out of debt... we followed the Dave Ramsey aproach. Quote Link to comment Share on other sites More sharing options...
Trish Posted March 31, 2012 Share Posted March 31, 2012 Those loans are not dischargeable, so, no. Quote Link to comment Share on other sites More sharing options...
Joanne Posted March 31, 2012 Share Posted March 31, 2012 I'll present the opposing view. Or at least an alternative. First, congratulations on going back to school. My decision to do so a few years ago was transformative. It was not without hiccups and challenges, but it was a positive choice for our family. I have gotten to where I am not against debt. Credit card debt, for the most part, yes. But against it in general? Nope. Not even for cars. Dave, no thanks on the kool-aid. ;) That said, I have landed somewhere between "new cars" and "beater". I recently purchased a beater trying to be frugal and have spent more fixing it than I spent buying it. I would have been better off combining funds for a better beater. :glare: So, while I would not buy or finance a new car, I will not buy a super old one, either. Transportation issues, cost, security, all contribute to quality of life. Running an old, gas guzzling vehicle to school would make an already stressful situation even more so. If a student loan allows you to get a decent used car, you have my support and understanding. :) Quote Link to comment Share on other sites More sharing options...
cjzimmer1 Posted March 31, 2012 Share Posted March 31, 2012 There are calculators that can help you claim the right amount. You can't obviously ask them to give you money ahead of time, but you should be able to bring it down to zero withholding. But even that doesn't ensure you won't get a large refund. We haven't had any federal taxes out in years but we still get a refund of 4,000-5,000 just because of the child tax credit. Since the OP also has 5 kids who most likely qualify, I'm guessing she is in the same position and that's why she gets the refund. For certain income to kid ratios, there really isn't anything that can be done to get that money spread throughout the year. Quote Link to comment Share on other sites More sharing options...
Joanne Posted March 31, 2012 Share Posted March 31, 2012 But even that doesn't ensure you won't get a large refund. We haven't had any federal taxes out in years but we still get a refund of 4,000-5,000 just because of the child tax credit. Since the OP also has 5 kids who most likely qualify, I'm guessing she is in the same position and that's why she gets the refund. For certain income to kid ratios, there really isn't anything that can be done to get that money spread throughout the year. :iagree: My refund exceeds my witholdings, which are minimal. Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted March 31, 2012 Author Share Posted March 31, 2012 But even that doesn't ensure you won't get a large refund. We haven't had any federal taxes out in years but we still get a refund of 4,000-5,000 just because of the child tax credit. Since the OP also has 5 kids who most likely qualify, I'm guessing she is in the same position and that's why she gets the refund. For certain income to kid ratios, there really isn't anything that can be done to get that money spread throughout the year. Yes, this is us. Quote Link to comment Share on other sites More sharing options...
Miss Peregrine Posted March 31, 2012 Share Posted March 31, 2012 Just an FYI but I believe children no longer qualify for the CTC the year they turn 17. Quote Link to comment Share on other sites More sharing options...
A.Balaban Posted March 31, 2012 Share Posted March 31, 2012 We had to do this last year. We used my student loan refund to put a downpayment on a car. My car that I was driving at that time kept dying on me in the middle of the street, and I was very much worried about an accident and safety. If this is what you need, then do this. I would not recommend getting a student loan though. I would combine your student loans and tax refund and buy as much car as you can handle. :) Quote Link to comment Share on other sites More sharing options...
TranquilMind Posted March 31, 2012 Share Posted March 31, 2012 Well when I got my studen loan, there was a part in it that specifically stated it could NOT be used for a car loan. And something about if it was found out it was used as a car loan it had to be paid back right away and there were extra fees or charges or something. Agree. No, I would not do this and you are probably prohibited from using it that way, but it has been decades, so do not know about what happens today. Quote Link to comment Share on other sites More sharing options...
TranquilMind Posted March 31, 2012 Share Posted March 31, 2012 Can you site the law prohibiting this? I think a car can be a valid expense that a student loan can be used to cover. However, the thing to remember is that student debt has to be repaid. You can't just declare bankruptcy. So let's consider a really bad case scenario. You take out a student loan, use it for a down payment on a car, and have an additional small loan on the car. You finish school and can't find a job. You still have to make the car payments, but you can't. Your car gets repossessed, sold, and the earning applied against the loan balance. So now you have no car, and hopefully no car loan. But you still have the student debt. I would be careful. Another way to look at it is that you will be paying off this inexpensive car that you buy for decades. I'd save some money and buy an old car cash. Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted April 1, 2012 Author Share Posted April 1, 2012 Another way to look at it is that you will be paying off this inexpensive car that you buy for decades. I'd save some money and buy an old car cash. What do you mean decades? I am planning on paying back the loan in Feb. plus it is only $3000. Quote Link to comment Share on other sites More sharing options...
Joanne Posted April 2, 2012 Share Posted April 2, 2012 What do you mean decades? I am planning on paying back the loan in Feb. plus it is only $3000. Based on some of the responses, I think many responders assumed that you'd use student loan funds for a down payment and you'd aquire a large car debt on a much expensive car. My suggestion is if you are going to get a car under $5000, have it thoroughly checked by a mechanic before buying. Quote Link to comment Share on other sites More sharing options...
HSMom2One Posted April 2, 2012 Share Posted April 2, 2012 Would it be worth considering for you to use a limited amount of your money to repair the van? It may be a gas guzzler, but the amount of money spent on gas would be less money than interest paid on a loan. If you could repair the van, then I would suggest driving it awhile longer and then use it as a trade in or sell it in advance to help purchase another car when you have money next year. You could pay cash for a car AND pay off the student loan you are planning to take care of. Just some more thoughts for you to consider. Blessings, Lucinda Quote Link to comment Share on other sites More sharing options...
aggieamy Posted April 2, 2012 Share Posted April 2, 2012 I'd drive the van until next year and then buy another car with your tax refund. Quote Link to comment Share on other sites More sharing options...
Melissa in Australia Posted April 2, 2012 Share Posted April 2, 2012 I am guessing that Student Loans must be way different in US than Australia. Here the student loan is from the fed government, and only covers tuition, nothing else. Quote Link to comment Share on other sites More sharing options...
Lolly Posted April 2, 2012 Share Posted April 2, 2012 I'd drive the van until next year and then buy another car with your tax refund. :iagree: Unless the van is already breaking down regularly and leaving you stranded, I would keep driving it while saving as much as possible towards the next vehicle purchase. Chances are that the old vehicle will make it until then. If your dh has a car that he is driving and it is not as far for him to drive to work, could he drive the van on the days you have class and a further drive? Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted April 2, 2012 Author Share Posted April 2, 2012 Based on some of the responses, I think many responders assumed that you'd use student loan funds for a down payment and you'd aquire a large car debt on a much expensive car. My suggestion is if you are going to get a car under $5000, have it thoroughly checked by a mechanic before buying. Yes, I was planning on buying a car for $3000 or less. I have a fantastic mechanic (good christian friend) I was going to go to to see if he could find me a car in this price range that might need a small bit of work to make into a great little car. Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted April 2, 2012 Author Share Posted April 2, 2012 :iagree: Unless the van is already breaking down regularly and leaving you stranded, I would keep driving it while saving as much as possible towards the next vehicle purchase. Chances are that the old vehicle will make it until then. If your dh has a car that he is driving and it is not as far for him to drive to work, could he drive the van on the days you have class and a further drive? My husband and I are separated and in the process of divorce. Quote Link to comment Share on other sites More sharing options...
Trish Posted April 2, 2012 Share Posted April 2, 2012 Yes, I was planning on buying a car for $3000 or less. I have a fantastic mechanic (good christian friend) I was going to go to to see if he could find me a car in this price range that might need a small bit of work to make into a great little car. That same mechanic can keep your van running. The cheapest car is the one you already own. Quote Link to comment Share on other sites More sharing options...
prairiebird Posted April 2, 2012 Share Posted April 2, 2012 (edited) Well, I just lived through this. I say take the loan out and buy good little used car that gets great gas mileage. Put the most basic coverage you can afford on it. It seriously changed my life. I had no bus transportation, and I had one big old conversion van with bad gas mileage. And gas was only $2 at that time, not the $4 I have around here today. (Actually, gas here is nearing $5 a gallon.) It was easier to park on campus. It became my mobile office where I kept all my supplies. I didn't have the option of online classes- some subjects don't work that way, unfortunately. It really didn't take that long to pay off. And I was able to pay it off within two years (and could have in one if I used my entire tax return for it. Might as well do something useful with the fact that you're so dang broke you have a return even if you withhold everything :001_smile:.) I ended up also using it for grocery trips, running around when it was just me etc. when I didn't need a giant van. So. Much. $$ saved on gas alone. Having a smaller vehicle makes so much sense when your only other option is gargantuan. And on top of that, I still have my car. It's not like it went away when classes were over. It's a Hyundai Accent and has nearly 200K now, but it's still going. I paid about $4000 for it out-the-door. And yeah, while you can't 'escape' a student loan, you can usually adjust payback of the loan to your situation. I have found my student loans the easiest to negotiate and put on my own terms per payback. the only way I wouldn't do it is if you couldn't handle the extra insurance. We just did liability only. I also had a small savings account specifically for repairs, but you'd need something like that no matter what car you went with! Edited April 2, 2012 by prairiebird Quote Link to comment Share on other sites More sharing options...
talltexan Posted April 2, 2012 Share Posted April 2, 2012 No car, no van, no loan no headache. Save about $500 , you can do that, a teen can do that. then buy a bit up old car and use it for the commute. A good mechanic told me about my 1981 car, you are OK if you pay about $200/mo in repairs.... as in any lease you'll pay that much and you don't own the car. so far it is one or twice a year that I had to pay that much in repairs.... it holds my 3kids in carseats, and my hubby and me... it is a honda accord. Find yourself a Honda or a toyota, 4 door. they may not have ac, (mine think it does) but we can move the fam. and we owe NO ONE. Why?, we just got out of debt... we followed the Dave Ramsey aproach. :iagree::iagree::iagree: If grants pay for school, I would not take out any loans. Debt is not the answer, and you really need some savings to be able to fall back on. It will take a lot of discipline, but if you feel that a new vehicle is a necessity, wait and save up a little money every month and put it aside for a different used vehicle. I agree that paying $250 in repairs every month is still cheaper than paying for a new car/interest on a loan. It is inconvenient, yes, but at least you won't be in debt! I encourage you to borrow The Total Money Makeover by Dave Ramsey from the library before you make any financial decision! :001_smile: Quote Link to comment Share on other sites More sharing options...
fairfarmhand Posted April 2, 2012 Share Posted April 2, 2012 :iagree: Unless the van is already breaking down regularly and leaving you stranded, I would keep driving it while saving as much as possible towards the next vehicle purchase. Chances are that the old vehicle will make it until then. If your dh has a car that he is driving and it is not as far for him to drive to work, could he drive the van on the days you have class and a further drive? :iagree: Quote Link to comment Share on other sites More sharing options...
Leav97 Posted April 2, 2012 Share Posted April 2, 2012 A good mechanic told me about my 1981 car, you are OK if you pay about $200/mo in repairs.... as in any lease you'll pay that much and you don't own the car. so far it is one or twice a year that I had to pay that much in repairs.... it holds my 3kids in carseats, and my hubby and me... it is a honda accord. Which is great if you don't mind being stuck without transportation because your car is stuck in the shop all the time. Quote Link to comment Share on other sites More sharing options...
Michelle My Bell Posted April 2, 2012 Author Share Posted April 2, 2012 Which is great if you don't mind being stuck without transportation because your car is stuck in the shop all the time. That really is part of the problem. Every time my van has broken down recently, I have to coordinate either towing the van or getting someone to take me 25 minutes to my mechanic and back home. Then I have to get some form of transportation while it is in the shop, followed by picking it back up the same way. Secondly, It is very nerve racking to deal when the van is making weird noises (grinding breaks) or strange smells (leaking break fluid X2 because there were 2 leaks) or shaking while stopping (messed up rotors) or broken tie rods in the middle of the street. This has all happened and more in the last 6 months. I know it is my decision, and I am not yelling at anyone. I value your opinions and it has caused me to think but I wanted to tell you all the things that have gone wrong with this vehicle to see if it might change your perspective. Quote Link to comment Share on other sites More sharing options...
Joanne Posted April 2, 2012 Share Posted April 2, 2012 Which is great if you don't mind being stuck without transportation because your car is stuck in the shop all the time. Or the safety issues of breakdown. Quote Link to comment Share on other sites More sharing options...
Joanne Posted April 2, 2012 Share Posted April 2, 2012 My husband and I are separated and in the process of divorce. Michelle, situations like this are game changers. They manage to challenge man theories and ideals. I have been there; a sngle mom driving 56 miles a day in a 13 year old van, in Houston, with no a/c and that broke down often. PM me anytime. Quote Link to comment Share on other sites More sharing options...
JeneralMom Posted April 2, 2012 Share Posted April 2, 2012 Safe transportation is extremely important. What would happen if you broke down in the Uni parking lot after an evening class? I would consider it a good use of the loan. DH and I did not use our loans to pay for cars when we were grad students because we were able to get nice loan rates on the cars but we did use them for rent, tuition, parking, food, books....all viable uses. Quote Link to comment Share on other sites More sharing options...
Trish Posted April 2, 2012 Share Posted April 2, 2012 Yes, I was planning on buying a car for $3000 or less. I have a fantastic mechanic (good christian friend) I was going to go to to see if he could find me a car in this price range that might need a small bit of work to make into a great little car. That same mechanic can keep your van running. The cheapest car is the one you already own. Quote Link to comment Share on other sites More sharing options...
Parker Martin Posted April 2, 2012 Share Posted April 2, 2012 I said I'd just stick with the van, but that's before I read that you're single right now. I'd get a super cheap reliable car. ETA: Breaking down on the side of the road and having a man you can call who will come immediately is much different than breaking down on the side of the road and dealing with it alone. Quote Link to comment Share on other sites More sharing options...
Tap Posted May 28, 2012 Share Posted May 28, 2012 Resurrected thread....spam reported. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.