Friday, June 20, 2008

The Story about the $50.

For those of you that don't know and need some background, since January we have been trying to stay on Dave Ramsey's Total Money Makeover plan (get more info at http://www.daveramsey.com/). Since then we have been not charging anything on our credit cards and trying to pay all our debt off. We have been debating for a while whether to sell our car and buy a cheaper one or not. Well, this last Friday we had decided that we would finally do it. We went into the bank to see if we could get approved for a home equity or debt consolidation loan to help cover the negative equity we had in our car. We could sell it for $14000, yet still owed about $18000. Bank of America Said that they couldn't help us since they didn't like our credit scores or something. So, we decided to try a local credit union. We walked into the Aberdeen Proving Ground Federal Credit Union branch here in town and explained our situation to them and asked what they could do to help. We just happened to talk to the Branch Manager who was extremely helpful throughout the entire process. She helped us apply to a Personal Loan to consolidate the negative equity and some credit cards. She also pre-approved us for two $5000 car loans to buy new replacement cars with. Since it was the end of the work day and the loan officer she likes to work with was already leaving she put us on the top of her pile in the morning. So, on Saturday, we went back to the credit union to get the results. We didn't qualify for the entire amount we were hoping to cover all our credit cards, but it was enough to cover the negative equity and one of our higher interest cards. We then went car shopping. Since we already had a $14000 offer on our car from CARMAX (http://www.carmax.com/) we thought that if a dealer wouldn't offer more, we would sell it to carmax. The most any of the dealers offered was $12000, so the choice was obvious as to who we would sell to. Now to just find the one to buy from... The first one we looked at, a 2002 Suzuki Aerio, ended up being the best option at $4995, so we decided that on Monday we would go back and give it a final test drive before telling the dealer we wished to buy it. The test drive went well, so we went in to get the paperwork for the credit union. We wanted to see if we could get the total out the door and on the road price down to $5000. With the taxes and fees, the price came to about $5600 and we haggled it down to $5300. We thought that was pretty good, so we took the papers tthe credit union. While we were there, they checked the value of the car online and decided that they could only loan us $5088 since the value online came through at $4425 and 115% of that is $5088. So, we called the dealer to see if they could go any lower. After a few minutes of "checking with Jay" the offer was that they would "spot me the $200 for 30 days and I would come in later and pay them back." I didn't accept, and put the saleman in the hot seat to decide how much he wanted to sell the car. We held firm and he finally decided that he wanted to sell the car more than we wanted to buy it so he dropped the price down so that the out the door price was $5088. Victory!!! The credit union finished the paperwork and gave us three checks, one for the dealer, one for the credit card, and one for carmax to cover the negative equity in the car we were selling. We went to the dealer, picked up our new car, and then headed to carmax to sell our old one (note: our old car was actually newer than our new one, but try not to be confused). At carmax, they needed to get a 15 day payoff for our old car loan and since the credit union only got a 10 day payoff total, we were short $50 (you were wondering when that would come in weren't you). Since we had the boys with us and they had been desparately trying to sit still all day (they actually did a pretty good job), we got everything that we could signed and then headed for the nearest ATM for some cash. Since Reighlyn had $10 in her pocket, I got $40 out and then went back to carmax and gave them the money. They gave us the paper work and the deal was done. Now the only thing left to do was to give the check for our credit card pay-off to the bank. I decided to do that during my lunch on Tuesday, so we went home with almost $9000 less debt than we started. ($18000 - $14000 + $5000 = $9000 in "car debt" and $18000 - $9000 = $9000 less debt!!!). Now we are still pre-approved for another $5000 car loan, but we are not sure how soon we will be getting another car. If the 90 days of the pre-approval run out before we get another car, we don't think it will be that difficult to get pre-approved again. So, we did end up with a smaller car, but the resultant monthly payments are also $200 less, so we can pay off the rest of our debt faster!

1 comment:

Amy Bateman said...

Sounds like you made a positive choice that should reap many benefits. Way to go!