I spent most of my Saturday at a car dealership. I've done this a few times before having bought 3 brand new cars in the past; prior to my financial awakening.

Fortunately, even though I spent most of the day at the car dealership, the new car was not for me. My Uncle called me up on Friday advising he was ready to buy a new truck and wanted me to go along to help him out. For some reason, when my family has financial questions, they seem to call me. I'm glad to help out when I can.

I was going to write a post about the entire experience but it would be an extremely long. I've decided to take a different direction and just highlight three main points from this experience:

  • It's financially beneficial to have a good credit score.
  • Know the full details of your financial situation.
  • Never co-sign for a car loan.
It's financially beneficial to have a good credit score. My uncle had no idea what his credit score was. He didn't even know there was a such thing as a credit score. Turns out, his score was only in the high 500's. Not the best score when you are trying to make a large purchase on credit (with no down payment). With a good credit score, you have options and the transaction goes alot smoother.

Know the full details of your financial situation. Again, for the same reason as posted above. Not only that, he was not sure how much money he made or who his creditors were. This can save you time and embarrassment (if you have a poor credit score).

Never co-sign for a car loan. With my uncle's low credit score, he had very limited options for purchasing his new truck. I purchased my car from the same salesperson and same dealership so the salesperson knew that I had a good credit score and stable income. The salesperson is a distant relative so she pulled me aside and asked if I would co-sign on the loan. I do appreciate the fact that she did not ask me in front of him. That would have been extremely awkward!!
As much as I wanted to help him out, I had to decline. I did not want to risk him not making the payments and having this car loan on my credit report for the next 6 years. Luckily, his wife had a high enough credit score to co-sign on the loan.

After spending about 6 hours at the dealership, my uncle drove away in a brand new 2008 Nissan Titan. I drove it and I have to admit it is a nice truck but I think financially it is not going to work out. The payment is a bit much for their income and gas will be a killer. I tried to talk him out of it and explain the cons of purchasing a new vehicle but in the end, my words fell on deaf ears. I know the feeling as I had been there before. You want something and you will not stop until you get it; whether it makes financial sense or not.

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11 comments

  1. Patrick // December 30, 2007 at 10:48 AM  

    Great move not co-signing. I don't plan on ever doing that if I can help it (unless it is a joint purchase with my wife). It's too bad he might have bit off more than he can afford. I hope it works out.

  2. Deborah // December 30, 2007 at 2:01 PM  

    Save the co-signing for when you have adult children that need a helping hand...

  3. Mrs. Micah // December 30, 2007 at 3:20 PM  

    Sounds like you were a valuable asset for your uncle to bring along, even if you didn't co-sign (good move!). He probably did better than if he'd gone alone. Of course, a 2007 car would have probably done just as well...c'est la vie. People make their own decisions.

  4. plonkee // December 30, 2007 at 3:50 PM  

    You can lead a horse to water...

    Sounds like you were probably a helpful person to have around, and I bet you're very grateful she didn't ask you to cosign in front of your uncle.

  5. RacerX // December 30, 2007 at 6:48 PM  

    The car thing is scary when you are trying to be responcible. All the dealer wants to talk about is the payment, since that is how most buy.

    Try not to take our loans on cars, especially new ones, if at all possible. You take 20%+ depreciation by driving it off of the lot!

  6. Frugal Momma // December 31, 2007 at 2:58 PM  

    Glad you didn't co-sign but sad that your uncle isn't making a smart financial move.

  7. Pinyo // January 1, 2008 at 8:28 AM  

    I nearly choked when I saw the post title. I know you are trying to work out your car addiction and all. Good post, and great advice about co-signing...very dangerous stuff.

  8. SingleGuyMoney // January 1, 2008 at 2:20 PM  

    *Pinyo - I was wondering if anyone was going to say that...LOL

  9. Erin/Working For Financial Freedom // January 7, 2008 at 3:28 PM  

    I'm with Pinyo, I groaned when I saw your post title :) SO glad it's not you.

    We tried to convince my SIL not to get a new truck last month. We were so close to having her see the light, but she got it anyway. (with a co-signer too. NOT us!)

    Sigh. We tried. Her first payment and the gas prices are gonna hurt.

  10. Mr. Yatin // July 15, 2008 at 1:53 AM  

    Do you know about MoneyLIFE,a fortnightly personal finance magazine?

    www.moneylife.in

  11. vc // November 15, 2008 at 11:48 AM  

    don't buy any car until you have tried http://homegear.com/r/?q=23127559&r=1143