I would like to propose a new standard for tax-refund season and how we spend refunds. As a matter of fact, I would like to propose a new standard for every season, every month, 365 days out of the year. Buy used cars rather than new cars. Here's why.
A lot of my clients are just itching for their tax refunds because they know they can finally get a new car. However, it's understood that your car will depreciate the minute you drive it. It can depreciate by 60% by the time you finish paying it off and 25% in the first year alone! So, understanding this, why do we still buy new knowing that we can't afford it?
I get it, new cars that finally work, get good gas mileage, have automatic windows instead of the manual cranks.
...but you don't have to buy new to get good quality.
I find the overwhelming temptation to buy new cars over used is very unfortunate. I get calls daily about someone buying a car, realizing they can't afford it and then trying to save it through bankruptcy. Sometimes my clients lose their jobs, sometimes they move to a different city to take care of an ill family member, sometimes my clients get divorced and are left holding all the finances. However, sometimes my clients just buy new cars because they can. Stop that!
Unless you can buy a new car outright, you don't need it. Anything else is a facade that we buy into (literally), and a lie that we believe. And I am fully aware that I'm addressing the majority of America! I suggest that, as long as your cars are in good-working condition, until you pay off some of your debt and can save up enough to pay for a better car in cash, that you keep the car you now have, pay your debt off in a Chapter 13 and then revisit this topic in a couple of years.
Even if you're delinquent on your payments and you're running from the repo man, even with a very recently repossessed vehicle, Chapter 13 will help save your current car and lower the interest rate! If your car has recently been repo'd, we can typically get it back within 10 days (as long as it's not sold at auction).
Save your car, lower your payments and start to rebuild your finances.
How a Chapter 13 Lowers Your Current Car Payments
I'll begin with this disclaimer: all situations vary depending on your interest rates and other circumstances. Not every bankruptcy is the same as another. That being said, here are a few scenarios of what your car payment could be in a Chapter 13 bankruptcy.
If you owe: Your new monthly payments:
$15,000 $276.25
$12,000 $230.21
$10,000 $184.17
$7,000 $138.12
$5,000 $92.08
In order to get an accurate analysis of your unique situation, you will need to have an attorney fully assess everything during your consultation. We can pull your credit report, see what you owe and estimate what your monthly payment would be in the reorganization. It's free so why not?
I want you to understand that you can spend your money on much better things than new cars. Imagine the financial stability you'll have with a lower car payment and less debt. Just imagine the peace you'll feel knowing you didn't fall victim to car-buying fever this year and knowing you can now afford to start saving for summer vacation. Debt-relief isn't hard, it's just knowing when to make some changes. We can help with that.
