Q&A: The woes of this car-less worker can’t be fixed with junkers or leasing schemes

Dear Liz: My spouse and I are in Chapter 13 repayment bankruptcy and have a few more years to go. We’re obviously on a tight budget.

My spouse has the reliable car, but I’ve already paid $1,500 cash each for two junkers and it’s caused major stress. I know we can petition the court and be allowed to get financing, but we do not want to and can’t afford to on our budget.

I am, however, up for an evaluation and raise soon at the small, private company where I work.

I am thinking of asking that instead of a raise, they lease a vehicle for me. I do travel sometimes for business so it could be legitimized in that sense. If they leased a vehicle for, say, $200 a month, that would be close to the raise I’m expecting.

The real question is how to handle insurance and liability. Is it possible for my company to lease a vehicle but have the insurance liability fall on me, meaning would I be able to insure it under my own policy though the lease would be through the company?

Answer: Probably not.

A personal auto policy might not even cover your own car if it were used primarily for business. Personal policies typically wouldn’t cover a car owned or leased by your employer.

Also, businesses usually need more liability coverage than most individuals carry, since companies can be bigger lawsuit targets. You can ask for a leased car in lieu of a raise, but expect the cost of the insurance to be part of the calculation and be prepared for the company to decline.

It’s unfortunate you bought two junkers in a row, because the amount you ultimately spent could have bought you one decent car.

Car comparison site Edmunds has advice for finding reliable vehicles for $2,500, which it says is a reasonable budget for buying a solid car.

The vehicles are likely to be 10 to 15 years old and may have over 150,000 miles on the odometer, but if they’ve been well-maintained they can be reliable rides for several more years.

You’re likely to get the best deal via a private party sale, and you’ll want a good mechanic to check out any car before you buy. Your mechanic may even have a lead or two on cars that could be good candidates.

Your raise may allow you to revisit the idea of financing a car, albeit at a high interest rate.

As you know, you won’t be able to buy anything extravagant, and the purchase will have to be approved by both your trustee and the court. If the car is a necessity for you to get to work and you’ve been in your repayment plan at least two years, you have a good chance of being allowed to finance it.

If the car is not a necessity, you may have other options.

If you live in a city, a transit pass may get you to most of the places you need to go and you can rent a car or use a ride-sharing service when you need more custom transportation. Many people have discovered that cars are a costly hassle, and they live just fine without them.

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  1. Ted Mittelstaedt says

    Liz, I have repaired my own vehicles all my life and I wanted to add bit to your response to ” I’ve already paid $1,500 cash each for two junkers and it’s caused major stress.”

    It IS possible to get a reliable car for $1500 but not if you don’t know a lot about cars. Your questioner obviously doesn’t since he or she got taken twice.
    You are correct that a $3000 car is likely to be more reliable BUT I would stress heavily that there are no guarantees on cars at that price range EVEN IF you have a mechanic check the vehicle out. Ultimately you really are on your own in this price range and your questioner already had a proven bad track record in selecting used vehicles. Keep in mind that most independent mechanics don’t see a lot of +15 year old cars because the prices on those are such that most of their owners are just extracting the last miles out of them and have no intention on spending money repairing them. They may have forgotten all of the gotchas if it’s been 5 or more years since seeing a lot of those cars.

    My advice on getting a reliable cheap vehicle is for the questioner to identify what make and model vehicle they want, then spend several weeks on the model-specific forums on the Internet reading the Q&A. Note that there’s wide variations in even the same models of the same year. For example take the 2001 Ford Focus 2.0L. The LX uses a SOHC engine that has a serious defect but the SE uses a DOHC engine that does not have that defect. From the outside the models look identical. Unless the buyer takes the time to read the forum and research the specific brand he or she won’t know this.

    I would also strongly recommend getting the exact same make, model and year of car as owned by his or her spouse. This allows for them to use the same mechanic, and same maintenance parts. For example if they buy a new set of 4 tires in the fall they can take the best ones of the used tires and mix and match them with the other car to throw out the 4 worst tires in the family. They can use the same oil and antifreeze and other fluids out of the same bottles for both cars. And if one vehicle gets wrecked they can save major parts such as headlight and taillight assemblies, glass, hood and trunk lids and so on in case the other vehicle is damaged. And the vehicles will have the same preventative maintenance schedules making the PMs easier to remember and more likely to get done.

    The mistake most used car buyers make who are looking for a cheap car is to be too impatient. They go for the first thing that’s listed at their price range with no regard to what make and model it is. It is simply not possible to research the skeletons in the closet of unfamiliar models in the hour in between seeing the listing online then running out to see it. Figure out the model in advance, then be patient.