My brother got into a bad financial situation (CC debt settlements, FICO tanked from 800 to 500, everything had to get “right-sized”…and now lives paycheck to paycheck) His credit is bad, mine is excellent, I am willing to co-sign to get the best deal for him.
I am wondering if the hackers could help him out on what car to get?
My thoughts:
Target: $300/month (all-in, i.e. includes amortized upfront fees/taxes)
Max: $400/month (all-in, i.e. includes amortized upfront fees/taxes)
Timing to get car: ASAP, might be able to wait until February if necessary. Preferred location is MN.
Option 1: Lease
Pro: Low payments, if things get worse could transfer lease
Pro: No unexpected costs due to vehicle reliability
Con: Higher insurance costs due to higher value car
Con: Higher annual registration costs of car due to higher value car
Option 2: Reliable used car with monthly payments
Pro: Lower insurance costs
Pro: Lower registration costs
Con: Likely higher monthly payment, due to unsubsidized MF/RVs by manufacturers, so maybe fewer options?
What cars and options come to your mind? How can we help him out?
His needs: Get from A to B for work/personal, no kids, GF’s dog might hop in the car, and shuttle elderly parents around town as needed
Mileage: Could stay at 10K per year with careful planning, but 12K/year is manageable without much effort.
FWD with snow tires will increase your options and save you money by a lot. Everyone assumes AWD is the only way to go but it’s not. That’s the hack for used car buying in wintry states.
Co-signer or not, this is a bad path for a 500 FICO borrower.
While the technical obligation is the lease payment, you’re actually on the hook for the full cap cost of the car.
Also the best deal isn’t going to necessarily be from a vehicle brand / captive that allows transfers or makes them easy (ie Audi/VW, Nissan/Infiniti won’t take you off the lease, they just add on the transferee).
Here’s a very fairly priced car in MN. This generation is the most reliable and I’ve seen seniors using them as Ubers all the time so it should be fine for when your parents need a ride. Very good on gas and very good on consumables such as tires.
In general you’re always better off buying from an actual owner vs a dealer or a curbstoner.
As always get a PPI from a good independent mechanic. Pick their brain and establish a relationship because it will come in very handy over the years.
How many miles would you say he will be driving per week/month? FWIW, the higher the mileage on a lease the more you will pay. If your brother drives more than 15k miles a year, I would not recommend leasing.
Second gen Priuses are actually incredibly reliable and cells/modules can be replaced individually… stories of complete battery replacement are mostly attributable to dealers/mechanics who didn’t know what they were doing or upsold the customer on a full replacement. There’s a good reason its value retention exceeds probably any mainstream vehicle you can think of. IYKYK.
Anyway I’m not invested in promoting Priuses here. It was just one of two Toyota/Lexus products at sub $12k on MN Craigslist that I thought may be worth sharing. The other is a RX — also a hybrid.
@TypeSH thanks for sharing a couple of Auto-trader links, by the time I clicked on them the pages were no longer available. Do you remember the Year/Make/Trim/Mileage/Price? I could try searching for similar vehicles.
Look at the Dodge Hornet. you should be able to get a two year lease for next to nothing with applicable rebates. Go to True Car and get the affiliate certificate. Join Tread Lightly for $100 for affiliate pricing. Do a search for Dodge Hornet and you can see some of the deal metrics.
Absent a unicorn EV deal that’s sub $200/m for payment, insurance and energy combined I don’t see how or why anyone living paycheck to paycheck should be leasing.
I think LH forgets or takes for granted just what kind of financial security it takes to practically always be in a new car, with that convenience & luxury paid for by perpetual payments, full insurance and property tax if applicable.
Anyone living paycheck to paycheck needs feedback on how to spend less and save more, not the opposite.
@Bluemkn57cars he drives a max of 15K miles, but can probably stay at or under 12K. With more careful planning, he can also manage 10K per year (WFH) only commutes short distances M-F.
Getting a Hornet deal at $200/month would be perfect! I have never had luck with dealers in MN (I am located in CA). I’ll ping the local dealer and ask for an initial offer on a Hornet eAWD and see how it compares to deals on the forum.
So it seems like the decision is:
Go with a unicorn lease (Hornet) deal in MN
If we can’t score (1) then go with a used car
What I like about a unicorn lease:
Doesn’t need to worry about any unexpected maintenance, and the payment is manageable and even lower than a used car.
I expect that in a couple of years he will have repaid most of his debts and be in a better position. He does have the cashflow, but over 60% of it is going to go to pay debts for the next 13 months.
We don’t have to rely on local inventory of used cars
As someone who has dealt with MN winters, I worry about rust on used cars that could be temporarily covered up by paint to get them sold without scrutiny…
