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I’m a College Student With a Big Car Payment – Rachel

“Dear Steve,

I bought a Kia Spectra in 2006 and financed through Wells Farge with a 10% rate, due to my credit not being wonderful. I was just a sophmore in college and needed a car so I had no choice. I tried to find the cheapest new car so I would have a reliable form of transportation. My monthly payment is $310.53.

At the time of my purchase I had a full time job at my University so I could easily pay the payment. However, now I have been working part time jobs, which are often temporary, to keep afloat. I am still a student and finding a good job to work around my schedule is very difficult so I often have to settle for part time, low paying, temporary jobs.

I have never missed a payment and never will on my car, that is one thing I promised myself when I got my car. In the past 3 years of owning my car I have accrued more credit card debt to support myself (I know how bad this is but I had no option) and have payed my car loan down to $11000 (the amount I owe).

I am not sure what to do because I am having an increasingly difficult time paying my car and my credit cards. My car is the main problem because it is $300 a month. I tried to refinance my car through my loan company Wells Fargo last year and they said it would not benefit me any. It has been about 1 years since I tried to refinance and I am wondering if refinancing is something I should try again.

I can make my payments now with a little bit of a financial bumper for expenses but I dont want to get to the point of not being able to pay the car payment so I want to know if there is something I should be doing. Maybe refinancing or something.

I have poor credit and have a lower paying job then when I did at the time I purchased my car so I dont even know if I can refinance but I need to know if it is the first thing I should try.

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Should I TRY to refinance my car loan with my poor credit and lower income than when I purchased it? Is refinancing pretty much the only option I have to lower my car payment? Should I try to refinance with my current lein holder Wells Fargo or should I try another company? Other ideas to help with the large payment? Any ideas or tips to help me out?


Dear Rachel,

The poor credit issue is going to be the hurdle. But through companies like you can refinance used cars for a longer period of time. And while the overall amount you will pay is going to be greater, your monthly payment can be lower. At this point, depending on how “poor” your credit is, you can try to refinance and if you are rejected, we’ll just have to look at a Plan B.

While you have been current on your car payment, it has been at the detriment of your credit card accounts. You’ve recognized that you have needed to supplement your income by using the credit cards to get by.

The most obvious things you can do at this point is to increase income to meet your obligations. That might mean having to drop out of school at the end of the semester or before another to do that.

There are legal solutions like bankruptcy that will allow you to keep your car and reduce the amount you repay on your credit cards but in your situation I can’t see that being much of a benefit if you need access to the credit cards to make ends meet. For bankruptcy to be a total solution for you you’d need to be able to pay for your basic living expenses in cash since there would be no more credit cards to fall back on.

These are all difficult choices and solutions but one realty here is that sometimes there are no great solutions and selecting the path to follow to resolve the problem is a matter of picking the least crappy one.

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The best outcome from any horrible financial situation is that you can walk away with knowledge that can help you as you move forward in life. In this situation a key lesson might be that it’s okay to buy a cheaper used car or a “beater” for basic transportation instead of a new car. At the very base level a car just hauls our butts and stuff from place to place. When I was broke, I drove a used postal jeep that I bought for $500.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


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