I was given a car five years ago by my grandmother, a 1989 Toyota Camry with 
40000 miles. It now has 190000 miles on it. I recently (10k miles ago) replaced 
the transmission and rotors, and the car is running well from a mechanical 
standpoint. However, it's starting to show its age in other ways -- it's very 
noisy in the cabin at high (more than 55mph) speed, various bits of trim are 
held on by duct tape, and the air conditioning hardly works at all.

Should I replace my car, or should I run this one into the ground, considering 
it still gets me where I need to go? I think I would like to get another Camry 
(or an Accord), probably a 98 or 99, with low (less than 50k) miles. Does this 
sound reasonable?

If I do get another car, what are my options? I am currently making a 
reasonably good salary ($60k), but I have very bad credit (left over from 
college). I am enrolled in a credit counseling service and am paying down my 
debt (about $3500 in credit card bills). What would be the best way for me to 
purchase a car, considering my bad credit history?

Dear Placain,

Thank you for your inquiry!

Considering your debt history and the fact that your current car still runs, 
your best option is to wait until you've saved up enough money to replace your 
current Camry.  By purchasing 98/99 Camry or Accord in full, you do two things 
that will greatly improve your credit:

1.  Avoid paying more for the car than it's worth by not having to pay interest 
on the financing, and other loan charges, and
2.  Gain equity: the money value of a property.

This is the most reasonable option because it will allow you to not go into 
debt further, and give you some equity should you ever need to borrow against 
it.  If you chose to replace your car, according to Kelly Blue Book ( 
http://www.kbb.com/ ), an authority on new car pricing and used car values, a 4 
door Camry LE or Accord LX should cost between $9000-$12,000 depending on the 
options and conditions of the car.

If for some reason you can't do this, your other option is to finance a car.  
Make sure you shop around for who has the best interest rates, compare offers, 
and negotiate the best deal you can.  Be cautious about advertisements offering 
financing to first-time buyers or people with bad credit because these offers 
often require a large down payment and a high APR.  You may be taking a big 
credit risk if you agree to financing that carries a high APR.
 
Generally experts say that your monthly finance payment on a car should be 
approximately fifteen percent of your monthly income.  It's best to evaluate 
your finances to know what you can afford as a down payment as well as what you 
can afford to pay per month. It is also advised to keep this information to 
yourself, do not share this with the dealer.  Then research the cars that fit 
into your range, and narrow down your selection.  There are many good on-line 
resources for more information about buying a used car.  Some highly 
recommended sites include:

Federal Trade Commission – Buying a Used Car
http://www.ftc.gov/bcp/conline/pubs/autos/usedcar.htm
CNN – Car Buying
http://www.cnn.com/TECH/9701/02/site.seer.carbuying/

This site is particularly useful because it has a car payment calculator option 
on it:

Auto Buying Guide
http://auto-loans-financing-bad-credit.com/buyingguide.htm

Don't feel bad if you can't save up enough to replace your car outright - it's 
almost impossible to live totally debt-free; most of us can't pay cash for our 
homes or our children's college educations. But too many of us let debt get out 
of hand, that is why if you can wait and buy your new replacement by saving up 
and paying for it in full.  Ideally, experts say, your total monthly long-term 
debt payments -- including your mortgage and credit cards -- should not exceed 
36 percent of your gross monthly income. That's one factor mortgage bankers 
consider when assessing the creditworthiness of a potential borrower.

While you're cleaning up your debt, order copies of your credit reports, since 
the information contained in them will directly affect the interest rates 
you're offered on credit cards, mortgages and other loans.  There are three 
major credit bureaus: Experian, ( http://www.experian.com ) Equifax ( 
http://www.equifax.com ) and Trans Union ( http://www.transunion.com ).  
Reports cost about $8.50 each, but they're free if you've been turned down for 
credit, employment or housing in the past 60 days.  Also remember, when you get 
your reports, be sure to check for inaccuracies.

If you need a debt consolidation service, here are some free ones to try:

Free Debt Consolidation Services
http://www.free-debt-consolidation-services.com/
Non-Profit Debt Consolidation
http://www.consumerdebtservice.com/
Christian Credit Counselors
http://www.christianccc.org/

Also a great site for some solid financial advice is:
Personal Finance – Money 101
http://money.cnn.com/pf/101/lessons/9/

Search terms used:
buying a used car
car financing
establishing good credit
debt consolidation

I hope this information was helpful.
Thank you and have a wonderful day!

Best Regards,
Skis4jc

A very well thought out answer. Thanks!

Considering that your car still runs, you have many options. If you want to buy 
a car, you can try selling through the newspaper classifieds, instead of 
trading it in at the dealer, because you are likely to get far more money if 
you sell it on your own. 

If you decide to buy a new car, finance rates for bad credit can be high. This 
page gives you an idea of what sort of bad credit finance rates you can expect:
http://makeashorterlink.com/?Y12D35EB

Since you are a recent graduate, General Motors has a car loan program for 
graduates, called GMGrad. You can access it at http://www.gmgrad.com

With bad credit, you'll want to have a larger than average downpayment, because 
that will make it easier for you to make a purchase.

Hi there!

I can sympathize with your plight, having just been through the same process 
very recently. 

It sounds to me as if you are uncomfortable keeping your current car, due to 
the noise, loose trim and lack of air conditioning.   Do you feel safe in the 
car?  Can you afford to replace it later without relying on whatever trade in 
value it might have if you were to replace it now?  

The first thing you need to ask yourself is whether the car is worth 
repairing.  You didn’t say precisely what kind of Camry you have, so 
information given will pertain to the basic 4 door, with AC, power steering, 
and AM/FM Stereo.  According to the Kelley Blue Book [http://www.kbb.com] 
(using my own ZIP code as a reference, as you have not provided one), your car, 
if found to be in "Fair" condition, has a trade in value of only $675.   To 
repair the trim and AC on your own may well cost you more than the car is 
worth, as would many mechanical failures (blown head gaskets, for instance, can 
run upwards of $1500).

The next thing to consider is whether you have sufficient resources to replace 
the car should it die unexpectedly.  Not having a car to trade in may well mean 
a higher required cash downpayment.

Insurance is also something to consider. Does your yearly liability insurance 
cost more than your car is worth?  If it does, replacing your car may be to 
your advantage - by financing a new or used vehcle and making timely payments, 
you improve your credit rating, which in turn may lower your insurance 
premiums.  Insurers such as Geico [http://www.geico.com] and Progressive 
[http://www.progressive.com] consider credit ratings when determining insurance 
premiums, as do most insurers.

Many dealerships have special programs for people with poor or no credit.  I 
would recommend looking in the Autos sections of your local newspaper and 
yellow pages first, to see which dealership in your area offers such a 
program.  They will consider the trade in value of your car,  the amount of 
cash you have on hand for a downpayment, your income and your recent credit 
history (being enrolled in credit counseling will work to your advantage 
here).   Some will even match your downpayment up to a certain amount!

Some dealerships may even offer "financing for all" - a small downpayment and 
proof of employment are usually all that are required.  Beware, 
however.  "Financing for all" programs usually carry stiff interest charges.

Here are some auto loan information  pages specializing in "bad credit" 
situations:

People First
http://www.peoplefirst.com/

Auto Credit Express
http://www.autocreditexpress.com/

Auto Credit Finders
http://www.autocreditfinders.com/

Auto Net Financial
http://www.autonetfinancial.com/


I hope this information was helpful to you.  Good luck!

I suggest you follow your credit counselor's recommendation.