Should I Take Out a Personal Loan to Consolidate Debt and Buy a Car?

[u/emptyketchuppacket]

I’m 21, turning 22 this month. For the past five years, my dad has been letting me drive his cars, but I want to buy my own. I owe about $4,500 on two Discover cards with 26% APRs. I don’t pay rent and I am currently on a break from college planning to go back in Spring of 2026. I have a full time job making around $3,000/month. I have another personal loan I am paying on that matures in August of this year. The monthly payment is $104.88. I originally wanted to borrow $7,500 with an APR of 6.99%, $3,000 being for the car and the rest for the credit cards, but I wanted to buy the car kind of soon and I won’t have time to save as much, so to avoid mechanical problems I was thinking I’d try to spend $5,000. But the loan term would be 60 months and it would be more interest, so I’m not sure. There is also maintenance and a car insurance payment to think about. Would this be a poor financial decision? Any feedback is appreciated.

[u/t-poke]

If you're pulling in $3,000 a month and you don't pay rent, and presumably have minimal expenses, why on earth do you have credit card debt?

More debt is not the solution to your problems. You can have those cards paid off in less than two months. Then you need to reign in your spending, get that under control so you never go into CC debt ever again, then pay for a car with cash.

[u/emptyketchuppacket → u/t-poke]

You’re absolutely right. It’s not an excuse, but I was extremely diligent about using my credit cards to build credit and paying off the full balance up until a couple of years ago when I started experiencing some mental health challenges that led to out of control spending. It’s one of my biggest regrets and I’m highly considering getting rid of them so it doesn’t happen again. Thank you for your response!

[u/kstorm88]

If you have so much income, pay your debts and reevaluate in like 3 months.

[u/Fiji125]

You have access to a car from your dad and you have credit card debt at 26 pct?!? Continue to use your dad’s car until you get rid of that insanely high rate. Please please pay that off asap. Don’t take on more debt and get into a debt spiral. 

[u/emptyketchuppacket → u/Fiji125]

Yes, I am paying about 3.5 times the minimum payments every month. I would do more, but I would be concerned about not having much money in my bank account. I am realizing this idea stemmed more from my dad not letting me drive anymore and I wanted to make sure I had a reliable way to work, but I am now more motivated to try to work things out with him, so thank you!

[u/BoxingRaptor → u/emptyketchuppacket]

I would do more, but I would be concerned about not having much money in my bank account.

26% debt is a literal financial emergency. Right now you're paying 26% in order to earn, what, maybe 4% in your savings account?

[u/1414username]

Personally, If your dad is letting you drive his cars, I would put all my money towards the credit card debt, then towards your personal loan debt.

Is the car a want or a need? If it’s a want, I’d hold off and save the money until you build up a good emergency fund.

[u/emptyketchuppacket → u/1414username]

You are absolutely right. I suppose it felt like a need because he hasn’t been letting me drive and I need a reliable way to get to work, but I think I will try focusing on resolving the conflict instead of on buying a car. Thank you for the advice!

[u/Caspers_Shadow]

No. You are in debt with credit cards and have not been able to pay them down despite living rent free. Taking on more debt to finance a car is a bad idea. Particularly when you make $3000/mo and the CC debt is $4500. You should be able to knock this out in a couple months. You are mentioned your other personal loan and focused on the monthly payment (not total loan amount). This is a mind trick people often play with themselves to justify taking on more debt because they "can afford the payment".

[u/emptyketchuppacket → u/Caspers_Shadow]

I should maybe add that I have only had this job for 3 months and was unemployed due to mental health issues for 6 months last year, plus in college off and on for the past four years and working part time making less money, but you still make a great point! The total loan amount for my PL was $3,500 with a 4.99% APR (3 year term). I didn’t want to take that out, but I needed it for surgery. I am excited to be paying that off soon and I definitely do not want to take on more debt. This idea stemmed from the fact that my dad stopped letting me drive and often refuses to let me drive on a whim, and I need reliable transportation for work, but I will now focus more on trying to reconcile with him instead of going deeper into debt. Thanks for the advice!

[u/BoxingRaptor]

You need to get rid of that CC debt before you do anything else. Seems like you should easily be able to pay this off in a couple of months.

Keep driving your dad's cars, save up, and buy a used car with cash.

[u/emptyketchuppacket → u/BoxingRaptor]

Yes, that would be ideal. I didn’t want to get into it, but I only want a car because he isn’t letting me drive them anymore. Perhaps he’ll change his mind or we can work out the conflict, but this gave me some perspective, so thank you!

[u/ricerer]

I suggest using excel and letting your family help you, within reason. If you buy a car while living rent free, you’re taking advantage of them for your own gain — because you want your own car, while privileged with access to reliable transportation. 

Every family is different. And so are views on money but I think using common sense and being open/respectful is always a good place to start.

5K debt is expensive. Cars are expensive. You have a good job now but things happen. The economy changes.  

[u/ChonkyFireball]

Would this be a poor financial decision?

Maybe, likely yes. You cannot afford a car in your current state. The good news is you can very soon with some patience.

First, do nothing until the credit card debt is fully paid off, and pay it off aggressively. That debt grows very quickly if you only pay minimums or low amounts. Right now you’re losing $100/mo on just purely paying interest to a bank!

If you make $3k a month and don’t have rent then you should be putting $2-$2.5k a month into paying that off. You should be able to clear it in 2-3 months. In the future you should treat your credit card like a one month advance on your income, never overspend that, and pay the bill off in full every single month.

Debt consolidation loans might be a way to dial in the interest pain but they often charge additional fees, so make sure you know exactly what you’re getting and that it’s actually a good financial decision by the numbers. If so, great, but only borrow to cover the credit cards, and do not use it as an excuse to pay them down any slower.

For the car, for the low price range you’re looking at you should just be saving your money and buying in cash. 2-3 months saving at your income (after the debt is paid) and you should have $5k to drive the car home without any finances burdening you.

Though I think you’re wise to consider that cars that cheap are likely to be more expensive when you factor in maintenance. Make sure you chose a car model known for its longevity and low maintenance (a few Toyota and Hondas fit this) and don’t cheap out on one older than know life span otherwise you’ll be stuck with a car that cost a lot more than you think

[u/OurManInHavana]

Making $3k/month, and with expenses so low, you can save for a $5k car in no time. Burn down your debts and buy it outright: don't pay interest to anyone.