Recently I’ve been fighting through a situation in my family that simply screamed to be written about.  I’m just a bit player in the drama, and perhaps that’s what makes it so painful to watch. 

The Phone Call

My wife received a phone call from her brother.  Yes, that same brother who helped convince me never to lend money to family members again.  We’ll call him Toby, so I don’t have to keep calling him my brother in law.  Toby decided to buy himself a car – fantastic!  Well, not quite.  See, the car Toby wants is a used BMW.  I’m not sure of the model, but I’m pretty sure it’s a 5 or 7 series.  This car also happens to cost $9,000 ( plus taxes ).  While on the phone, my wife asked my opinion.  I heard BMW and 100,000 miles, and I said NO, NO, and NO.  Buy a Honda or Toyota.  Don’t buy a BMW with miles.  Through the phone I could already hear Toby’s protests.

The problem

  • The car costs $9,000 – but Toby’s entire cash savings is $4,500
  • Used BMM with high miles – repair costs will be through the roof, and there’s no cash cushion here
  • Since he doesn’t have enough money, Toby will have to finance most of this purchase
  • Toby has awful credit, so my mother-in-law will be co-signing
  • Toby has two small children at home ( 2 and <1 ), and his “baby’s mama” doesn’t work.
  • Toby works in the construction business, and is currently doing small side jobs, nothing full time
  • Toby is accepting unemployment benefits from the state

Oh my, where do I begin?  Toby is convinced that this is the car for him.  He can’t afford it, so he’s going to put $2,000 down and finance the remainder.  His credit history is plain awful – he can’t finance a pack of gum on his own.  Somehow, he convinced his mother ( who has good credit ) to co-sign for him.  Even more incredibly, he managed to get her onboard, without having any say in the car he buys.

So the dealership approved the duo for a sweet 13.9% interest rate.  Adding up down payment, taxes, and interest, this BMW will end up costing Toby over $11,500.  That’s before any repairs, of course, and there will be repairs.  And they won’t be cheap.  And of course, Toby doesn’t have a cash cushion built up to be able to reasonably absorb any repair costs.

The moral dilemma

I’ll come right out and say it – it is absolutely, 100% morally wrong for Toby to finance a car at this stage in his life.  He is currently receiving unemployment benefits every month due to lack of full-time job.  That means that his state will be effectively making his car payment every month – exactly how much sense does that make?

It’s our fault

Disregarding my advice to avoid used BMW’s and find a cheap Honda or Toyota, Toby blames my wife and I.  Apparently, it seems, we really don’t want him to succeed.  Yes, by advising him not to buy an unreliable car that he absolutely cannot afford and should not buy, we’re keeping him from being successful.  It reminds me of one of my favorite Bible verses:

The way of a fool is right in his own eyes, But a wise man is he who listens to counsel.

Toby is convinced that this is the car for him, he can afford it , and anyone who disagrees is just trying to hold him back.  In many ways, I shouldn’t judge.  Heck, I have a huge mortgage and 2 cars financed.  But the differences are clear – I have a cash cushion, only 1 child, a sterling credit history ( low rates ), and I have a history of managing my money well. 

I don’t want to hold anyone back.  I don’t want to keep anyone from enjoying the finer things in life.  But I do want to help keep people, especially family, from making stupid mistakes.  And that is exactly what Toby is doing – making an awful mistake.  Both morally and financially.  What say you- am I being overly harsh, or spot on?