cathmom Posted April 17, 2012 Share Posted April 17, 2012 (edited) deleted thanks! Edited April 22, 2012 by cathmom personal info Quote Link to comment Share on other sites More sharing options...
Starr Posted April 17, 2012 Share Posted April 17, 2012 Depending on the year of the vans I think I would go for 3. You could get a car that will last longer and not have exceedlingly high payments. And be done with the MRI. Quote Link to comment Share on other sites More sharing options...
Brigitte Posted April 17, 2012 Share Posted April 17, 2012 Depending on the year of the vans I think I would go for 3. You could get a car that will last longer and not have exceedlingly high payments. And be done with the MRI. :iagree: The less you pay for the car, the more likely you are going to have problems with it or that it will die sooner. I would also hate having that MRI bill nagging me. Quote Link to comment Share on other sites More sharing options...
Mom22ns Posted April 17, 2012 Share Posted April 17, 2012 I don't personally take on debt for automobiles, but I think in your circumstances, I would consider #3. Get rid of the medical debt and find the van you need. Finance what you must, hopefully for 3 years or less and pay it off as fast as you can. Quote Link to comment Share on other sites More sharing options...
cathmom Posted April 17, 2012 Author Share Posted April 17, 2012 (edited) deleted Edited April 22, 2012 by cathmom Quote Link to comment Share on other sites More sharing options...
MrsBear Posted April 17, 2012 Share Posted April 17, 2012 What is the interest rate on the medical debt versus the interest on the used car loan? That should help you decide which is better in the longer-term financially! While the medical debt payment may be annoying, the interest rate you're paying may be better than you'll pay for a used car loan. Used car loans are currently (for excellent credit) about 4%, for average good credit they're in the neighborhood of 7%, and if your credit isn't so good, then it can be as high as 12-18%. New car loans, on the other hand, some are currently 0%-0.9% for a number of manufacturer's, so it's a better deal for financing on a new car, especially if you can find one that's a left-over from last model year with good incentives available with the low financing rates. But you do need the money in your budget for the car payment. The other option is to look at whether you can get a 0% rate credit card for 18 months and use that to pay for the car instead of financing with a car loan. I have a friend that recently did this, she needed a car, had $5,000 to put down cash and got a $5,000 card with 0% interest for 18 months. Her payment is $275 a month. If she'd financed her used car with a car loan, her payments would have been $300 a month, so doing it that way saves her $25 a month, or $450 over the 18 months. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted April 17, 2012 Share Posted April 17, 2012 I don't know if this situation would work for you, but I had medical bills from my surgery last year and the hospital has a deal with a local bank. The hospital co-signs with you on a loan from the bank. When you do this, the hospital decreases the bill by 25%, which is a bigger decrease than what the interest is. They spread the payments over 43 months, with no penalty for paying it off sooner. When it's paid off, it's reported to the credit bureaus as a positive paid-off debt. So, you get the MRI paid off and have very small payments that you can double up on (or more) that ends in a positive thing on your credit. Again, not sure if that's an option, or if you'd even want to do it that way, but I thought I'd toss it out there. If the other driver totaled your van, why aren't they replacing it? Quote Link to comment Share on other sites More sharing options...
AK_Mom4 Posted April 17, 2012 Share Posted April 17, 2012 I agree with the others - look hard at what interest rate you are paying on the MRI bill before you pay it off. One of the downsides of carrying an auto loan is that they usually require you to carry more insurance on the vehicle and that increases your costs. If the interest rate on the MRI bill is low, then it might be more cost effective to buy the best van you can find for $8K and just keep paying off the MRI bill slowly. Quote Link to comment Share on other sites More sharing options...
cathmom Posted April 18, 2012 Author Share Posted April 18, 2012 (edited) deleted Edited April 22, 2012 by cathmom Quote Link to comment Share on other sites More sharing options...
MrsBear Posted April 18, 2012 Share Posted April 18, 2012 Paying off the medical debt is not about interest rates but about cash flow. Because the place will only finance 2 years out, we are paying $100 a month for a relatively small amount. We actually are paying 0% on it, but it ties up $100, which is not a small sum to us. Right now you have $8000 and need a car. You have a $2000 medical debt to pay off, at 0% interest, that costs you $100 a month. Should you pay it off and leave $6,000 for the car replacement or continue paying $100 a month and have $8,000 for the car? I honestly don't know your situation, but interest free debt costs less long-term than debt that carries interest, even low interest. Only you can decide if your carry cost for a loan is worth it or not. If you did pay off the $2,000, would you need to finance any of the car replacement? If you don't have to - if you can find something that will hold you for a year or two for $6,000 - then it would make sense to pay it off. If you need to finance a portion of the car replacement, you're then taking on interest that you don't have to pay now on the medical debt and doing that doesn't change your buying power all that much since a small loan will require a short repayment schedule, so you're really still looking at about $8,000 and the same payment you're already making - the only thing you'd change is that you'd be paying a car loan, not a medical debt, and you'd actually pay more for it, over the term of the car loan, because of the interest. If it were me, I'd either find a $6,000 vehicle and pay the debt off, knowing I'd trade the replacement vehicle in a year and save money to go toward that in the future, or I'd continue paying the $100 a month and buy an $8,000 vehicle and keep it until the medical debt was paid off. I wouldn't swap one debt for another. Quote Link to comment Share on other sites More sharing options...
LMA Posted April 18, 2012 Share Posted April 18, 2012 If the other driver totaled your van, why aren't they replacing it? When you total a car, the insurance company only gives the current value of the car, not a new replacement. 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.