By Eric Olsen, Executive Director HELPS Nonprofit Law Firm
Affordable transportation is often a concern for senior citizens. Some seniors go without basics to make car payments they can't afford for a car with little or no equity. Others need affordable replacement transportation but don't have the income to finance a car. What are some options for these seniors?
I am the Executive Director of HELPS, a national charitable nonprofit law firm that educates lower-income seniors on how to maintain their financial independence. We regularly speak with seniors searching for answers to transportation problems. First let's discuss options for buying a car, then what to do if you have an existing car payment you can't afford.
Financing a car from a dealer might not be the best option or even possible for a senior with lower income. Dealers generally sell used cars "as is." If it later has mechanical problems, then the dealer is not responsible. When you finance a car, in addition to high-interest payments, you are required to carry costly insurance coverage. What can you do if you can't afford a car payment and yet need transportation?
The Craigslist website is the free modern version of "Want" ads where you live. Advertisements include detailed descriptions and photos. You can find reliable transportation through Craigslist often for around $1,000 or less. Log into Craigslist's local website and click on the "cars and trucks" link under the For Sale section. Type "runs good" in the search bar. In the left-hand menu, you will see three links to search by: "all", "owner", and "dealer". Click on the "owner" link to search for cars advertised by owners only. Why search for a car sold by an owner and not a dealer? Many used cars are purchased by dealers at auction. They have no idea what the real condition of the car is. In my experience, private owners won't represent a car as being in good condition unless it actually is in good condition. After all it's their car.
Here are some ads on Craigslist from my town. I searched in "Owner Only," and "runs good" with a price under $1,500.
"2001 Ford Taurus SES with 179k miles. Runs and starts just fine. A/C, power windows/locks 50-60% tires left. Would make great commuter or 1st car for a new driver. Asking $1,200."
"$900 2000 Hyundai 4 door automatic sedan. This car runs fantastic very smooth and quiet very dependable good body and interior."
"2005 Pontiac Sunfire 4 cyl, automatic in good condition. Solid daily driver with no accident history and excellent fuel mileage. Second owner and have owned it since 2009. Runs good and is clean inside and out. Tires are in decent shape... and it has a few dings but overall good shape. $1200 Price is negotiable within reason."
If you go this route, the car you purchase may not be the newest car, but frankly, car styles change little nowadays from year to year. You bought it from the person who owns that car, who represents that it "runs good." Your insurance costs will be less. If the car has a major mechanical problem in a year or two, so what, you can junk it. Just think of the payments you'll have saved. But it will likely last much longer.
What if you already have a car with a payment you can't afford? If it's worth more than what is owed, you could sell the car and buy a less expensive car. But what if the car is worth less than what is owed? The contract allows you to return the car to the lender. When the car you financed is surrendered or repossessed, there is usually a deficiency or extra amount owed on the loan after the car is sold by the lender. The most crucial message HELPS has for seniors with debt they can't afford to pay is that federal laws protect seniors' income, including Social Security, retirement, pension, disability and VA benefits. Even if you happen to be sued for the balance of a car loan after it is repossessed, your income can't be garnished. Seniors don't have to go without necessities to maintain a car payment they can't afford. And if you need a car and can't afford a payment, check out Craigslist. It just may solve the transportation problem.
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HELPS is a nationwide charitable law firm that protects seniors with debt they can't afford from unwanted collector contact and educates seniors how to maintain their financial independence. Learn more about at www.helpsishere.org