Originally Posted by Ted H,Oct 9 2007, 11:53 AM

No, the money you owe just magically vanishes.



Most likely scenario:
They give you ~$12,000; you take that, and you buy another car at or below that cost. Then, yes, you still have the same car payment you had before. Why would an accident get you out of your car payment and a new car?

Originally Posted by bobushka king,Oct 11 2007, 06:12 AM

And a side note about the credit deal, I got screwed because I've never had a credit card and have no established credit. I'm 22 and have paid everything either cash or from loans from my parents, and because of this no bank will give me any kind of major loan. So even though I've been financially responsible my entire life, without a credit score, banks look at me like I'm a shlub. My advice, get a credit card early on with a low spending limit ($250 or so) and use it for day to day things (such as gas) and pay it on time every month. Even though you may only put $60 on it a month, just making payments on time will bulid your credit.

Originally Posted by tak_one_77,Oct 9 2007, 10:32 PM

That's insane!!

There is no chance he will be making three payments.

Simple as is.

If he has insurance and they pay out the car, then he no longer pays off the car (unless they don't pay the full amount).

If insurance doesn't pay out, then he has only paid for his insurance up until that point. You certainly wouldn't pay any more.

The question is did he have insurance and what does insurance think!?

Originally Posted by mxt_77,Oct 11 2007, 09:21 AM

That's terrible financial advice!

Do you expect your kids to pay cash for every car they buy? Do you expect them to pay cash for a house? You need an established credit history to finance these things. Otherwise, you'll end up with a terrible credit score and a high interest rate.

Even if you can pay cash for these things, it's not always wise to do so. If you can get a mortgage at <6%, you can take the money that you would've used to buy the house and invest it in the market and make 8% returns or better. So, now you're actually making 2% on the amount that you financed. The mortgage interest that you pay is also tax deductible, so that 6% might effectively be more like 4.5% (although if you're investing your cash, it will have capital gains taxes, but the long-term gains rate is generally lower than the rate that you'll deduct for your mortgage interest, so you still come out ahead).

Originally Posted by bloodzombie,Oct 11 2007, 05:46 PM

I agree, I'm 31 and have still never had a credit card. If my wife didn't have good credit, we would've had a hell of a time getting started.

but...

Feel free to confirm this elsewhere, but I'm pretty sure it doesn't help that much if you always pay it off every month. It actually helps your credit score if you carry a balance and make monthly payments on it. If you carry a small balance like $100 and make minimum payments plus any new charges you made that month, it will cost you very little extra. You'll be buying a great credit score for a couple dollars a month.

Originally Posted by dewke,Oct 11 2007, 04:54 PM

You're not getting a 30yr fixed for <6% right now...

Originally Posted by tbaker

While you can increase your credit by carrying a balance; it's not smart to do with a credit card because you are getting hit with a 20% interest rate.

Originally Posted by mxt_77,Oct 12 2007, 08:35 AM

I am... but that's 'cuz I got my mortgage about 2 years ago when rates were really low. But, you're right, I don't think it's likely that anyone applying for a loan today will get better than 6-6.5%.

Holy crap! What kind of credit card do you use that has a 20% interest rate? The highest I've ever had was maybe about 13%, but most people should be able to get 8-11%.

Originally Posted by bloodzombie,Oct 11 2007, 06:46 PM

I agree, I'm 31 and have still never had a credit card. If my wife didn't have good credit, we would've had a hell of a time getting started.

but...

Feel free to confirm this elsewhere, but I'm pretty sure it doesn't help that much if you always pay it off every month. It actually helps your credit score if you carry a balance and make monthly payments on it. If you carry a small balance like $100 and make minimum payments plus any new charges you made that month, it will cost you very little extra. You'll be buying a great credit score for a couple dollars a month.