PolishPete

When I was 17 I bought a Mustang. Financed using my dad's credit, I've been paying for the last few years. I now owe just under 4K on it. I realized I needed a good winter car this year, and bought the TL financed under myself. I've had a full time job since I was 16, and I can afford the TL, well both payments really. At first I wanted to keep the car, so I've been paying for both for the past few months, but now I'm realizing that I really don't need the Mustang at the moment. I barely drive it, and I'm paying $300 a month for it. I LOVE the car, so that is why I had a hard time deciding if I should sell it, but now I think I should. My neighbor who is 18 asked if I would sell it to him, and this is what got me first thinking about selling it. He has enought to pay it off, and some, about 5K. The car is worth $7.5K KBB, but with all the add-ons he settled to pay $11.5K. The person who was going to borrow him the money fell through, because that persons g/f wouldn't let him borrow the money to a 18yr old. I've known him since I was in 2nd grade, growing up next to him, and he has a cell phone under my name. He pays the day the bill comes every month, and works pretty hard. Should I finance it for him, through myselft...meaning should I sell it to him for what he has and "finance" the rest. Meaning, to take on the risk, give him a loan %, say 6.99%, thats a great used car rate in the Chicago area btw. Write it up through my lawyer? Take the car back if he defaults 2 months? Keep an up to date copy of insurance....kinda play it like a bank would?? Is it worth the risk? Any opinions count, and thanks in advace for any replies!! Here's a picture of the car:

MichiganRich

Sounds like a deal you should think twice about. That car is worth real dollars to any bank, and anyone who wants a car bad enough should be able to pony up the money in a way that doesn't involve you.

Theres some old saying about lending a money to a friend and winding up losing them both. That amount of money will change your relationship. Have you considered how many months would have to go by with no bad things happening for him to actually pay it off? I mean, lets say $300 a month would take more than 3 years, even without figuring in the interest you're proposing. Is this guy currently paying $300 a month for *anything*?

The risk factor is not to be taken lightly here, there's a reason why money is not 'borrowed' to people so easily.

By the way, that is a hot looking Mustang.

davenlei

NEVER let a friend borrow money. It is just bad policy. You will lose your money and friend. Take it from experience. If a bank will not lend him the money, why should you? You will probably lose the money and the car.

Formula 350

Just my 2 cents...

I have leant money to a friend to buy a car.. it was someone I had known for years... my best friend.. but, I WAS prepared to lose the money and not the friend..

He had leant money to another former friend of both of us.. I would never do so as the guy was a looser... he lost both the money and the friend... and the guys attitue was 'you got more than me, you can afford it'... at least he learned..

If you think that an 18yo is responsible enough it is up to you... but to me I would have his parents lend him the money... if THEY will not, why should you??

subinf

Money makes any relationship tricky. Very rarely will everything work out. Doesnt sound like its going to go sour given your history, but think about it carefully and explore other options (money from his parents, him getting a loan from a bank, etc)

MR1

There are a lot of years experience making above recommendations, hope you pay attention. I'll agree with them but add that it sounds like you may be able to afford the loss. Question is do you want to take the risk?

You have done quite well for yourself so-far. A couple of suggestions that you didn't ask for:

1. Think about purchasing some real estate if you have not done so yet.
2. A little more formal education might move your earnings up even faster.

Good luck with your decision.

erdoc48

You seem like a rather trusting person, but...

Banks are nice and impersonal, as they should be, and won't have any problem asking for money owed.

Don't do it.. as others have said, you'll lose both the car and the money. You won't get reimbursed from your friend's insurance company if the car gets totalled while he 'owns' it. You will get screwed.

05TLTony

I agree with everyone here, money and friendship do not mix well (esp. that much $$). You are risking ruining your credit as well.
I say, if you want to sell it to him, then have him give you the monthly payments so that you can pay off what you owe on it. After he pays you the rest, then you can sign over the title. Have a written contract or something.

bhelsdon

If you want to keep your friend and your money, don't loan it to him.

A_UFO

Friendships, even with a best friend, can go sour for many reasons that you cannot foresee. Current or future girlfriends can/will change the friendship you enjoy today.

Your friend should show responsibility by getting his own cell phone. Why should he continue to have a cell phone in your name that he uses?

Not that paying a cell phone is the same as paying for a car. However, he is an adult by law. It is time for him to start behaving like one and getting his own cell phone is just one tiny step towards responsibility.

Besides, he needs to build credit history. One way to build good credit is to pay your credit cards and other bills on time and in full.

PolishPete

Thanks for the replies guys...for the above responses: He has a cell phone through his parents, from a while ago, and when he was 17 he wanted a Nextel, that's who I work for, and I have an employee account with a great discount, so I put him on my plan...can't run credit on a 17 yr. old.

I'm trying to do well for myself...definitely interested in real estate, read some books, dable a little in the stock market...thinking maybe go into real estate...I've got 3 qts left for my bachelors in business, and am pursuing my master in business + at my school after I take the MBA classes (15 total), theres only 6 more to get an MIS. So I think I'm going to do that...if all goes well I'll have the associate(done), bachelors(almost done), and 2 masters done in the next 3 yrs. Councelor at shchool has outlined it all with the classes and it should be good....BUT I don't plan on working for anyone where my education would be helpful....it's merely a backup plan because I'd like to work for myself!!

Also, I would not give up the title until the car was paid off.

For me, it may only be worth the risk becuase I would be getting back some of the $ I have put into the car...I assume any other buyer wouldn't pay more then $9K for it...and if I sell it to him with an interest rate, I would also be making a little more there. Not to screw my friend at all by charging him more, but it's what he is willing to pay, what I am willing to recieve to sell, and now just deciding if the risks are worth the reward.

Thanks for the inputs again...keep them coming if you have anything else to say, or any experience. I'm only 21, and everyday I live and learn.

05TLTony

Pete, I didn't mean to say that you should hand over the title once the 4K was paid off. I meant after he paid off the amount you were selling it to him.

leedogg

If you absolutely want to do this, put everything on paper. This is the only thing that holds up in a court.