Your rates of bank

Dear Terry,
We are thinking about returning our car to the credit union. My husband had a big salary cut 10 months ago and over this period we have struggled to make the payments but managed to make them on time.
However, we are digging ourselves into credit card debt trying to keep our credit in good standing. How much will this affect our credit and is there a better option for us, like selling the car and making payments for the gap with the bank?
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Dear Terry,
I have a 2002 Chrysler Sebring convertible in very good condition with only 34,000 miles. The high Blue Book value is $8,000.
Would I look like an idiot if I went into a Toyota dealership with it as a trade and told them I wanted $12,000 for it and was only willing to pay $1,000 over sticker for a new two-wheel-drive, four-cylinder, Dodge PU Club Cab with all the bells and whistles?
— Laura

Dear Laura,
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Dear Terry,
My husband co-signed an auto loan for our son. The car is registered in my son’s name — my husband’s name appears on the loan only.
If our son was involved in an accident with injury to another party, could we be sued or in some way held responsible?
— Susan

Dear Susan,
In our litigious society, almost anyone can sue anyone else. So, there is always the risk that your husband could become involved. (more…)

Dear Terry,
I have a question about voluntary repossession. I got ripped off over a 2002 Chevrolet Tahoe. Now that I want to trade this car for something smaller, the car dealers won’t give me anything because of the high payments.
I have good credit. So, I was thinking about voluntarily repossessing this car and buying another one. Please give me advice. Am I stuck with this Tahoe for a couple more years?
— Nicole

Dear Nicole,
You may have good credit now, but you won’t if you simply dump this vehicle back on the lender. A voluntary repossession is as bad on your credit as having the repo guy snatch the vehicle in the middle of the night. (more…)

Dear Terry,
I have just filed for bankruptcy (due to a subprime mortgage debacle) and I am in need of another car. How can I re-establish my credit to get a car loan without getting completely ripped off with an outrageously high interest rate?
— Daisy

Dear Daisy,
It’s likely that the only lenders who will offer you a loan will be those that specialize in high-risk borrowers — of which, by virtue of the bankruptcy, you’re now one. (more…)

Dear Terry,
Twenty-eight months ago, my wife went out to a Cadillac dealership, traded in her paid-off truck and leased a 2007 Cadillac Escalade. I was not present. They took her $40,000 truck and applied $20,000 toward the new lease.
Our financial situation has changed, and she was not able to pay the new truck note for the past 2 (more…)

Dear Terry,
I purchased a Honda Element in May 2007, when I had a great-paying job. I have lost that job due to having to move because of domestic abuse. I am living in a small town with two boys and I am having a very hard time finding a job.
In short, I can no longer afford my car. My monthly payment is $495. My mother signed on the loan with me and I have ruined her credit now due to the fact that I have fallen behind on my payments.

How do I get out of my loan and still save my mother’s credit? I truly cannot afford a $500 car payment. I still owe $22,000, yet my Blue Book value is only $14,500. Please, can you give me any advice?

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Would you spend $55 to make your time on the road safer?

For little more than the cost of a fill-up at the gas station, you could increase your ability to deal with most road or safety hazards. Yet few cars carry such essential items, which could prove more valuable than a $2,000 satellite navigation system.

Here’s my list of essential safety items (and their cost) that should be in every car. They are available at most auto parts stores and some department stores.

Can of flat-repair sealant and compressed air ($5.99 or less)
This simple-to-use item — attach the can’s tubing to your tire’s valve stem and press the button on top of the can — seals most tread leaks and pumps up the tire so you can safety drive to a service station.

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If you’re looking for a good used car that gets great gas mileage, you’ve probably shopped for what conventional wisdom says is the “best” on the market: Honda and Toyota.

When buying used, it’s hard to go wrong with a Honda or Toyota. However, the downside is that those cars tend to be at the high end of the price ranges for their classes.

So what’s a bargain hunter to do?

Looking deeper into the market, you’ll find cars that are overlooked gems. These bargains have good reliability records, offer space and value for the money, and get at least 20 miles per gallon and as much as 36 mpg, according to federal government ratings.

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Dear Terry,
Is there such a loan for cars where the payment increases over the loan period? Right now, the job I have won’t allow me to pay a normal car loan payment. However, I’m studying to be a certified nursing assistant, so eventually I’ll make more money and will be able to afford a higher payment.
The reason I’m asking is I have 373,000 miles on my present car with bad tires, bad rear axle, bad rear-axle bearing, transmission slippage and so on. It would cost more than my 1994 Jeep Cherokee is worth to repair it.
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Dear Terry,
I own a 2004 Ford Expedition that I purchased used in September 2007 for $24,000. I didn’t expect gas prices to get where they are.
Since the Expedition only gets 13 miles per gallon, I wanted to dump the car for a smaller, more fuel-efficient vehicle. However, I am completely upside down on my loan. I owe $23,000 and the Ford dealership told me they would only give me $10,000, even though Kelley Blue Book rates it at $16,000. (more…)

Dear Terry,
I used a balloon payment loan to buy a car and I am coming up on the due date. If I take out a loan to finance the balloon payment, which category of annual percentage rate applies — the rate for buying a used car or the rate for a lease buyout?
— Brad

Dear Brad,
Each lender treats this situation differently. You can likely find one that will treat it as either a refinance or a lease buyout, each of which should have a lower rate than a straight used-car loan.

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