'The Car Was Repossessed, but the Debt Remains'


#101

My Dad, had a modest income while I was growing up, but took pride in supporting our family. His ethic was transferred to me as I began my adult life. I was never particularly fond of working on my own car, but I learned to do the maintenance and many repairs to save money. When I and my first wife both went to graduate school, we had saved for the expenses. I was able to purchase health insurance coverage for a price we could afford, because it had a $1000 deducible clause. ThIs was back in 1969. I wanted to be insured against disaster, but felt I could take care of our own routine medical bills. To this day, it bothers me to have insurance cover a.routine doctor’s appointment for a check-up. I drove carefully selected used cars for which I paid cash. I put aside enough in savings to cover routine repairs. I didn’t carry collision insurance. I just carried liability. If my car was.totaled, I had.enough saved to replace the car with another old car.
I spent a morning last week with a.friend from our days growing up. We spent our time rewiring light fixtures so we.could replace the 4 foot.flourescent tubes with LED tubes. We grew up together in a modest neighborhood. We went to a country school through 8th grade and then were transferred to a high school in a wealthy district where we were the poor kids. I went on to be a university professor and my friend became a respective court judge who has done much for disadvantaged youth in our community. Both of us today live modestly, but comfortably. We both have liberal political philosophies but live a conservative life style. We both agree that it would be great if our young people could grow up having the satisfaction of being able to provide for themselves.
What was really sad was when we reflected on some of our wealthy high school classmates who didn’t want for a thing, yet had very unhappy lives that in a couple of cases led.to suicide. Not having everything we wanted growing up and having the satisfaction of being able to provide for ourselves and our families we both agreed we now wouldn’t trade for anything. We both agreed that we were envious of our classmates whose parents gave them new cars while we didn’t even own a car–we used our family’s car.
I feel for those who aren’t able to do for themselves.and have gotten into a.positon where they owe money on a car that doesn’t provide reliable transportation.


#102

I also have a problem with these morally but unfortunately legal crooks. They do prey on the desperate, poor, ignorant, and just plain stupid. Payday loans, car title loans, rent to own, and the car loans with zero credit score. It used to be called “loan sharking”, was easy income for the mob, and was illegal.


#103

Back in the 50s while working in my family’s grocery store a regular customer asked my dad for advice. The man was totally illiterate, which wasn’t too unusual for a 40 year old at that time here and he had a legal notice that his car note was delinquent. The man was Dan Smith and dad asked him to return at 9:00pm which he did and unfolded the story of how he had a good(?) job and needed his car to get to work. He had bought the 1950 Ford from a ‘tote the note’ lot a year of so earlier and was to make a payment there weekly which he had apparently done as he had an envelope full of receipts for payments or money order stubs for payments he had slipped under the door of the dealership when he worked late. Dan never understood that the debt had been sold to a neaby finance company but because they took his money when he could get there so that’s where he dropped the money orders and the stubs and receipts, when lined up indicated the car was paid off without ever missing a paymenr. Dad kept all the paper work and told Dan to check back the next weekend. On Monday the dealership was called and referred Dad to Republic Finance and the manager there seemed uninterested in hearing the story and demanded some delinquent payments plus penalties and interest. At that point the dealer was recalled and told that all the paper work form the sales agreement to the receipts and pay stubs to the notice of delinquency would be photographed and published on 1/2 page of the local newspaper the following weekend regardless of cost. It wasn’t long until the lot owner and the manager from Republic were at the store with a clear BILL OF SALE for the car and an appology for their mistake.

Some peculiar things in my life have made profound inpressions on me and that story was one of them. Dan Smith was a quiet, hard working man with a wife and several children who he worked hard to support but because he had no influence and struggled to make ends meet neither the dealer nor the finance company cared to listen to his complaints. But while the cost for 1/2 page in the local paper would be more than Dan spent in groceries in a year there was no doubt that it would have been spent. When pushed my Dad was a hard nosed SOB.


#104

On the school question, I have some knowledge of this, living near Buffalo NY and having worked as a school bus driver in one of its suburbs.

The cost of living in Buffalo is much closer to that of rural Maine than it is to NY city. Yet Buffalo does spend almost $30,000 per year and yet some of their high schools have graduation rates of under 50%.

Non of the suburban schools have as high a cost or such pitiful performance. We drove both public and religious schools and the religious schools spent about 1/3 of the money and got better results. Why did the religious schools do better? Two big factors, they had parents who cared deeply about their children’s education and they didn’t have to educate children who were defiant of authority with parents who also taught their children that “nobody can tell you what to do.”

You can tell how successful a school is going to be by looking at the demographics of the families that live there. What percentage of single parents, what percentage of home ownership, poverty, even library use and newspaper subscriptions.

A child’s home life is the biggest predictor of success in school. By the second week of school I could predict which children were not going to do well, They were the ones who never brought their textbooks home.


#105

There are a significant number of Americans, possibly 30%, who through some combination of causes are found intellectually and culturally unable to deal with much of the day to day problems and responsibilities that come their way and all too often we have allowed unethical individuals to take advantage of these challenged individuals and basically rob them. Crooked car dealers are just the tip of the iceberg.

Some highly intelligent and well educated young adults have become so disgusted with the ‘system’ that they have chosen to live ‘off the grid’ though. Obviously life can be quite a hassle these days even for them. It’s no wonder that a 10th generation illiterate sees no reson to encourage their children to get an education. .


#106

$30k - Really. More like $21k

http://www.bizjournals.com/buffalo/news/2017/06/14/spendup.html

Private schools almost always do better because mainly because they pick and choose their students. I went to one of those private schools in upstate NY. Each student had to take an entrance exam. When I went to school (late 60’s early 70s) there were 5 times as many kids taking the exams as they accepted. My kids went to private schools in MA (over the border from NH). The private schools overall costs are lower. No special ed. Kids that are disciplinary problems are expelled.


#107

We sent our daughter to a parochial school, not for religion, but a better education, now it was not perfect, I remember helping her with homework in math, she had a problem, write out the solution, so I showed her and she failed, got the right answer, but it was not the way she was shown to solve the problem. Now I was in teacher ed for math and computers, and disapprove of my way or the highway, any solution that works is a good solution.

Now to try and get back to something relevant, economics and logic in loans is not taught in school, now I am guilty of being an idiot for taking out a 30 year mortgage on my house, but wife could not work anymore due to back surgery, and we were struggling. I went to quicken loans to refinance at a lower rate for a 15 year loan, and they told me if you pay an extra $85 per month towards principal, It will cost you less per month in the long run than if we refinance you at a lower rate and higher monthly cost due to fees etc.

Ya can’t know everything, and appreciated the info.


#108

Some years ago when I was 24 and had just gotten married, we needed some furniture for our small apartment. We went to a local, small town furniture store and picked out a couple of pieces for our living room. I got out my checkbook to pay for the items and the owner of the store offered me 90 days same as cash financing. He said it would help us establish credit. The store carried the note and I paid it off in 90 days. I think I send in 1/3 of the amount at the end of each month.
Some years later at a different store, I decided to buy a color television. I was offered the 90 days same as cash deal and I accepted it. A week later I received a payment book from a finance company with monthly payments stretched out over three years. The store sold the note to the finance company. I immediately went to the finance company with my checkbook and paid off the debt. The loan officer at the finance company was really nasty–told me that by paying off the loan , I had cost them money. I had the paperwork to show that the deal I signed was indeed 90 days same as cash.


#109

At one end we have middle income people whose desire for immediate gratification leads them to lease more automobile than they can afford and at the other end we have people whose desire to get ahead leads them to sign themselves into a Catch 22 car loan in order to get to the job they are sure will enable them get ahead. Go figure.


#110

There is nothing magical about a 15 year mortgage (except that sometimes they possibly have a tiny bit lower rate, but refinancing often costs “points”).

Get an a amortization schedule for a 30 year loan. Then when you make each monthly payment include the next month’s principal due, specifying that it be applied to principal. Voila! You have a 15 year mortgage.

30 years X 12 payments (12 principal + interest payments) = 360
15 years X 24 (12 principal + interest payments and 12 principal only payments) = 360

If you hit financial tough times and are struggling then you can go back to normal payments whenever you choose. You can temporarily bail out of the "15 year plan."
CSA


#111

Now I am not anybodies idiot, I am my wifes idiot, and I am sure what you stated makes perfect sense to somebody, now I did not go into the amortization table, though I have one of those books somewhere, but just figured a 15 year loan at 2% lower interest rate should be a money saver, and my 15 year with fees etc. would have been a higher monthly payment than doing the extra $85 per month on the current loan towards principal, so now I am dong an extra $125 per month towards principal because I can, but I have no clue what it really means.


#112

Good idea!! That’ll work. I have no idea if you’ve got a conventional fixed rate mortgage or one of those ARMs (adjustable rate mortgage). I have no experience with ARMs.

Check your balance periodically. When your balance gets low enough then you might want to just write a check and dispatch the whole thing. I did many years ago.

Over the course of a loan, inflation, job advancements and higher wages, etcetera, will cause a payment to be relatively smaller. What started out to be a substantial amount of money per payment turns into a relatively small amount after many years.

Car related… I don’t have any payments, but I suppose that some folks can use this strategy on car loans, too.
CSA


#113

I owe a …debt… of gratitude to those who are attempting to redirect this discussion in some respect back to cars.


#114

If you have Microsoft Excel or the free Open Office spreadsheet program, there are loan amortization table templates that you can download and play with to look at different loan scenarios. Toying with one can be quite the learning experience.


#115

Can one pay off principal on car loans not sure, thanks for letting us stray a little bit from time to time, after listening to car talk for so many years, straying off topic is kind of a token remembrance of the show?


#116

Yes, I do keep that in mind when reading the posts. Digressions and connections were a big part of what made listening to Tom and Ray so fun, but I also remember that at the end of the hour the show was still about cars and people’s relationship with them. :slightly_smiling_face:


#117

Some banks will not allow you to do that. Not sure their reasoning behind it.


#118

I think it’s based on the particular loan and the particular underwriter, not necessarily the bank. This might be a bank rule, but I doubt it’s that generalized. It’s more likely a factor of the particular loan type. That’s why it’s important to ask when you take out an auto loan or mortgage if you’re allowed to pay off it off early and whether there is a penalty for doing so.


#119

I know it’s not generalized…that’s why I said some banks do this. Not all.

The banks I know of that won’t allow you do allow you to pay off principle on Mortgages.


#120

It’s easier to put a major dent in the interest payment on a car loan by pre-payment against relatively low principal compared to a house. A house schedule is typically much longer duration as well so they have better chance of getting the minimum they want in interest over the course of the loan even if people make pre-payments