Overview of “So Broke I Want To Take A Loan Out Against My Car”
A caller facing a dispute over his children is considering a vehicle equity loan to pay a lawyer’s $7,500 retainer. Dave Ramsey urges him to avoid the high-interest title loan, shop for a lawyer with a lower retainer and a clear spending limit, and consider selling his car to fund legal costs.
The Caller’s Financial Situation
- The caller earns about $48,000 a year and takes home roughly $3,600 a month.
- He has no savings and just under $4,500 in debt.
- His car is worth about $11,000.
- The proposed vehicle equity loan would charge around 25–27% interest. The lawyer also warned that the case could cost as much as $15,000.
Dave Ramsey’s Advice
- Avoid the vehicle equity loan. Dave describes it as a title pawn with a punishing interest rate that could quickly create another financial problem.
- Shop for another attorney. He suggests looking for someone who might accept a $3,000–$5,000 retainer, and asking what work that amount would cover.
- Set a firm legal budget. Dave advises being direct with the attorney that the caller cannot afford an open-ended case or a $15,000 bill.
- Consider selling the car. If it is paid off, Dave suggests using the proceeds toward the attorney and buying an inexpensive used car with any remaining money.
- Focus the legal effort. Dave says letters, a filing, and skilled negotiation might address the immediate situation without an extended, financially damaging fight.
Key Takeaway
Dave’s central recommendation is to protect the caller’s ability to fight for his children without taking on a high-interest loan or unmanageable legal bills. He encourages the caller to clarify the attorney’s fees and scope before committing.