Dilemma

[KrazyHorse]

Yeah, forgot about that in this case...

(for everybody else, "amie" is a bad example, since before a vowel both the feminine and masculine forms of the 3rd person possessive are "son")

[JohnT]

Originally posted by Spec
Well, against all your advice, I decided to say yes.

I will have 2 cars under my name, A honda Accord V6 2001 and a 2001 Civic fully paid. Interest rate will be of 15%. I hope all you guys are wrong. I dont really trust him, but I trust her girlfriend ( the owner of the Civic ). If all goes well the loan will be paid in 3.5 years if he pays weekly. I'm pretty sure he will though,n losing her girlfriends car is not in his advantage, I know how much he cares about her...We are supposed to write a contract tonight.

Spec.

Wait...

Who's car is being held here? The gamblers, or his girlfriend "whom you trust" ( )?

If it is his car, you've done her a disservice. When* you take possession of his car, what sort of decisions do you think will start being made about her car? And you're assuming that she's going to sit passively by while you drive away in her boyfriends car.

If it is her car, then he has no collateral on the loan except his "feelings" for her. And you're assuming that she's going to sit passively by while you drive away in her car.

If you're crazy enough to follow-through (it sounds like tonight is the point of no return), in addition to a contract, prepare a payment schedule in Excel, have him sign that too, along with yourself, the girlfriend, and a witness. It might impress a judge enough to matter. Of course, you can't squeeze blood from a turnip...

I seriously doubt that this will end well. But it'll be an interesting story, nonetheless.

*Show some foresight for once, man, and at least price out a few repo guys this next week. They'll get you your car w/o you having to go through the hassle.

[JohnT]

Thanks to whomever corrected the spelling of the title!

[Winston]

In addition to all the other points of objection already given, don't sucker yourself into thinking that lending money on those conditions, and at a 15% interest rate is an act of kindness. In my book, you're quite clearly exploiting this guy and his predicament. Which, on top of all the rest that is wrong with this, isn't the best basis for a financial "agreement".

[JohnT]

15% isn't that bad on a distress car loan - actually, again Spec is doing him a favor by not charging an interest rate commiserate with the risk involved. It should more likely be a minimum of 25%, if not 50%. Private party loans are not covered by lending laws.

Spec?

Did you happen to check pricing on 2001 Accord V6's?

http://www.edmunds.com/used/2001/honda/accord/100001227/prices.html

http://www.edmunds.com/used/2001/honda/accord/index.html?mktcat=used&kw=2001+accord&mktid=ga324080

That's $5,000 less than "$16,000" you mentioned. Is this car severely tricked out?

[Winston]

15% is horrendous when there is collateral offered, if it is a pro annum interest rate, as I suspect it is. And the exploitation assessment rests on the other circumstances also. This guy has no other options, the way it's being presented.

[DanS]

I would charge the guy a rate commensurate with the risk Spec's taking on. Definitely more than 15%.

[JohnT]

He had the option not to gamble, Winston.

Spec is out $10,000 on a very risky loan, made because he trusts the girlfriend of the guy involved - i.e., a decision likely made by his nether regions. Or out of them.

15% is definitely a "friend" interest rate in this situation. How much interest would you charge a junkie on a $10,000 loan? When you boil it down to its pure essence, that was the decision Spec made: to loan an addict money to cover for the consequences of his own addiction.

[DanS]

JohnT: He's talking Canadian dollars. Need to convert.

[JohnT]

Ahhh. That makes sense.

Edit: Or edit.

[Winston]

He has the car as collateral, which makes all the difference. If he would be content to get the car instead of the continued payments, as he claims, he should not be charging 15%. That's exploitation.

"He had the choice not to gamble" - Sure, but right now, he has no choice but to accept the loan conditions, as dictated by Spec, who knows this very well and is clearly taking advantage of the fact. Notice his enthusiasm wrt. setting up the "agreement".

[JohnT]

He had other options, as spelled out earlier - did you not read the thread?

He could sell the car, pay the bookie, and buy a much-cheaper car - a 1992 Tercel or something.

[Winston]

Assuming he has even thought along those lines. They were options mentioned by other posters, not by Spec as coming from the guy in need of the cash.

Speculation, sure. But that's all we've got, since we don't know the guy, and apparently neither does Spec. But there's a lot of money to be made here on the back of someone else's misfortune and thoughtlessness, so who cares! Plus you get to appear "kind".

[JohnT]

Originally posted by DanS
JohnT: He's talking Canadian dollars. Need to convert.

I still think he under-collateralized the loan.

[JohnT]

Originally posted by Winston
Assuming he has even thought along those lines. They were options mentioned by other posters, not by Spec as coming from the guy in need of the cash.

Spec could have offered them to the gambler as options.