In my 52 years, I have obtained loans for a number of things – my wife’s engagement ring, two houses and a few cars. I have always found the experience expensive but never frustrating – until now.
For those who haven’t heard me complain already, I have a 2001 Chevrolet S-10 pickup with a host of ills that would be costly to cure. Among other things, the heater and air conditioner don’t work, the brakes and tires need replacing, one door is hanging by a thread, and it has an oil leak that a mechanic says will cost a minimum of $600 to find and repair.
All told, I figure I’m staring at more than $2,000 in purchases and repairs, which is more than I think would be wise to spend on a 12-year-old truck. So I have been looking at a replacement vehicle.
I don’t want another pickup, but I do like the higher ride a pickup affords; the older my knees get, the harder I find it to crawl out of low-riding cars. Climbing out of my wife’s car, I must surely look like a silent movie actor in a slapstick routine.
So I began my search for a replacement vehicle with the Ford Escape, a small SUV from a reliable manufacturer. And I found one – a 2001 Escape with low mileage, a pristine interior, an exterior with just one blemish and a price I could afford.
But the nice folks at my bank said the Escape was too old to quality for a traditional used-car loan. One alternative was a personal loan that would essentially double the monthly payment I had targeted.
I said no thanks and began looking for a newer car, one young enough to qualify for a used-car loan. I found one – a 2006 Chrysler PT Cruiser with just 67,000 miles, a perfect exterior and an interior that was stained but tolerable. Even better, I could drive off the lot for just $4,500.
But as it turned out, for newer used cars, my bank won’t loan less than $5,000, which was more than I needed. I asked for some leeway on the minimum but got none.
So as of this writing, I’m still driving a 2001 Chevrolet S-10, but I have learned a couple of things. First, I wrongly assumed that borrowing money was all about the ability of the borrower to repay. Turns out, what you’re buying is more important, at least when it comes to used cars.
Second, I now know why some people end up with loans they cannot afford. If they want to buy an older used car, they’ll need a personal loan at twice the interest rate of a traditional used-car loan. But if they want to buy a newer used car, they might have to buy more vehicle than necessary to get a loan.
I know banks are more cautious now than they used to. But where’s the business sense in making loans more costly than they need to be?