Bonnie CLAC

A Typical Situation

Jane's 12-year-old car just died, and her kindly mechanic tells her that her car will need a new engine costing over $3000. Finding and installing a new engine will take a little over three weeks, leaving her with no way to get to work while her car is being repaired.

Her car is starting to show some rust, and it's not going to be worth more than $850 even with a new engine.

Sounds like Jane needs a new car. But because of her bad credit history, she's not sure she can qualify for a car loan. What's the best way for her to proceed?

The "New" Used Car

A local dealer promises to "finance anyone."

The car
7 years old, 110,000 miles
Down Payment: $700
Monthly car payment: $250

What happens
Four months after she buys the car, Jane's mechanic tells her the car needs a new exhaust.

Total payments: $2,200
Repair costs: $700
Days in the shop: 5
Months the car will last: 9?
Stress level: Medium

Total cost per month: $483

The "Clunker"

Jane's sister-in-law has car that she's looking to get rid of. It needs new brakes and a new exhaust, but she'll sell it to Jane for $200.

The car
12 years old, 150,000 miles
Purchase price: $200
Initial repairs: $1,500

What happens
Three months after she buys the car, the engine dies unexpectedly, leaving Jane in need of another car.

Total payments: $200
Repair costs: $1500
Days in the shop: 9
Months the car will last: 0 (it's dead)
Stress level: High

Total cost per month: $283

A New Car

Bonnie CLAC helps Jane rebuild her credit through the Bridge Program, and helps her qualify for a low-interest loan on a new Honda Civic DX.

The car
New Honda Civic DX
Down payment: $0
Monthly car payment: $250

After six months
Jane's Civic is zipping along with regular oil changes. Because she's been so reliable at work, her manager gave her a raise!

Total Payments: $1,500
Maintenance: $30
Days in the shop: 2 hours
How long the car will last: 8 years
Stress level: Low

Total cost per month: $255