Dilemma

[Spec]

I have a friend, who I just learned has gambling debts. He's not a good friend, but I know him rather well.
Now he owes 7700$ in gambling debts. He didn't ask me for help, her friend, which is a really good friend of mine asked me for him. She wants me to lend him 7700$ to get rid of the debt. At first, well yesterday, I said no right away. But I thought of something. He has a car, a 2001 Accord V6. He has a loan on the car, a balance of 2400$. So the car, even transfered to my name, still is a leen on the loan. So my idea is, I lend him 7700$+2400$, he pays of the loan for the car and the shylock, I get the account closure saying the car is free from all creditors and then we transfer the car to my name. The car is worth around $16k right now. If he pays me back in 4 years, it comes up to payments of 273$ with a 10%/year interest.
So a summary, I receive payments of 273$ a month, making 2200$ in interest in 4 years, and since the car is under my name as soon as I lend him the money, if he misses a payment, I sell the car and it pays of the loan and I keep the difference. Right now, I'm his only option.
I dont see how I could lose here...Unless I'm missing something.
If you were me, would you do it?


Spec.

[JohnT]

You're assuming a person capable of getting $7,700 in debt to gamblers won't get into the same problem again.

You're also assuming that they'll make the payment, that the title transfer will be done properly, and that the car will be worth the amount needed when he defaults on the loan. What if he wrecks the car, what happens to your collateral then?

[JohnT]

If I was crazy enough to do this, I'd just outright buy the car from him for $10,000 and then flip it for $13,500, making a quick $3,500 in the process. Why worry about the quality of the physical asset for four years?

[Spec]

Originally posted by JohnT
You're assuming a person capable of getting $7,700 in debt to gamblers won't get into the same problem again.

You're also assuming that they'll make the payment, that the title transfer will be done properly, and that the car will be worth the amount needed when he defaults on the loan. What if he wrecks the car, what happens to your collateral then?

I will be there when he transfers the car to my name, I will hold the green little paper with MY name on it. Hence, since the car is under MY name, so will the insurance. So I'm not really afraid of him wrecking the car, I'll just get paid sooner.

Originally posted by JohnT If I was crazy enough to do this, I'd just outright buy the car from him for $10,000 and then flip it for $13,500, making a quick $3,500 in the process. Why worry about the quality of the physical asset for four years?

But then he has no car and cant get to work...I thought of that.

Spec.

[KrazyHorse]

Yeah. No bank is going to give him a loan of 10 000$ based solely on the value of his 2001 accord, for very good reasons.

Don't do it. It's too much money. I can already feel you getting ****ed on this one.

[KrazyHorse]

He can sell his car for 13 500, buy a beater for 3500 and pay off all his debts.

That ought to drive the point home to him. Helping him avoid direct consequences is not something a friend should do here. 7700$ is enough to teach him a valuable lesson, but not enough to ruin the rest of his life...

[CerberusIV]

If he has a car worth $16k on which he can clear around $13k if he sells it that leaves him just over $5k to buy a crappy car to get around in after he pays off his gambling debt.

As he drives around in a crappy car thinking about the nice car he used to have it might remind him that gambling more than you can afford to lose isn't a good idea.

edit: KH beat me to it.

[JohnT]

Who cares if he has no car? The guy needs $7,700 and that's probably where he has to get it.

Who pays the insurance? That's probably another $600/year, making the cost of the loan $7,700+$2,400+2,400 = $12,500.

The fact that you own a piece of paper with a signature will be cold comfort when you're out $9,700.00 when he defaults on payment 2 and skips out with the car (or wrecks it in a drunken fit of rage).

[DanS]

I think you would be crazy to insert yourself in this situation. I wouldn't bring your convoluted scenario up with any of your mutual friends either.

[Spec]

Wow...everyone is telling me not to do it...Not even 1 positive response. This sure is convinving. I guess him selling the car is the best idea.

Spec.

[Arrian]

Originally posted by KrazyHorse
He can sell his car for 13 500, buy a beater for 3500 and pay off all his debts.

That ought to drive the point home to him. Helping him avoid direct consequences is not something a friend should do here. 7700$ is enough to teach him a valuable lesson, but not enough to ruin the rest of his life...

Bingo.

-Arrian

[germanos]

Originally posted by JohnT
You're assuming a person capable of getting $7,700 in debt to gamblers won't get into the same problem again.

If I would have $7700, I would place 'quite or double' bet on the guy running up a debt in no time again

All other sensible comments have been made allready.

Stay out of this mess Spec.

[Winston]

I want to know if he lost the $7,700 playing online poker with KrazyHorse.

It could turn the whole thing around.

[Flubber]

NO dilemma here.

I follow a simple rule -- I never lend or borrow money with friends. That is what banks are for and if they aren't willing to lend a certain sum, I sure as herck am not

[Spec]

Originally posted by Winston
I want to know if he lost the $7,700 playing online poker with KrazyHorse.

It could turn the whole thing around.

Bakara, Casino

Spec.