Change car or keep it? A debt-ridden parent’s dilemma

Daniel is a computer technician. Her daughter had special needs, so she had to cut her work hours to transport her to the hospital.

Although he shares the journeys to and from the boy’s mother, from whom he is estranged, Daniel had no choice but to cut one day of work a week. “That brought my net pay down to $3,300, a $600 drop that leaves a huge hole in my budget,” she says.

He has shared custody of his eight-year-old daughter and pays $400 a month in child support. It also contributes to various expenses such as school tuition, clothing, healthcare, etc.

Ultimately, her finances are tight, especially since she has to make a minimum payment of $800 each month to pay off the balances on her two credit cards, totaling $20,000. So, he struggles to make ends meet and has a monthly budget deficit of $600.

A think about it

Daniel absolutely needs a car to get to work and transport his daughter to the hospital. He currently owns a 2020 SUV with an outstanding balance of $11,000. Its interest rate is 1.49% and the maturity date of the loan is January 2025.

With monthly payments of $770, Daniel wonders if he should buy a new, less expensive, more fuel-efficient vehicle. He also fears that his SUV, over the years, will start costing him a lot of money in repairs and would prefer to be able to count on a vehicle under warranty.

He went to consult the licensed insolvency practitioner Jean Fortin et Associés for advice on this matter and to find solutions to his financial problems.

Pierre Fortin, president of the trustee’s office, explains that a simulation was made with a smaller car. “A 2023 Toyota Corolla currently sells for $30,200 plus tax. At a current interest rate of $6.39, over 60 months, that makes payments of $590 per month,” he explains. At first glance, this may seem advantageous, but you better think twice…

The game is not worth the effort

Because in a few months, Daniel’s SUV will be fully paid for. “This will allow you to free up $770 a month in your budget, a significant amount. Of course, you will have repairs to do over time, but by setting aside part of the monthly payment saved, you will have the money needed for future maintenance expenses,” he explains Pierre Fortin.

He adds that Daniel also benefits from very good interest rates, but that these have increased significantly since 2020. “If he were to change cars, he would be bound by contract again for five years, and that without guaranteeing that the rate of interest would be reasonable. given its current financial situation”, says Pierre Fortin. In November 2023, rates ranged from 4.49% to 9.24% for an auto loan. With bad credit, you may be charged a higher rate, even 15-20%.

On the trustee’s advice, Daniel ultimately decided to keep his SUV. He also presented a consumer proposal of $200 per month for 60 months, which will allow him to pay off all of his credit card debt. As soon as the proposal is submitted, they also stop earning interest on the balances.


  • To take stock of your financial situation and identify areas where you can save money, the first thing you need to do is your budget. To make your task easier, use free tools available online like
  • Do you want to know how much a loan will really cost you? Online calculators, such as, will help you determine the true cost and make an informed decision.
  • You can consider paying off your loan faster by opting for bi-weekly payments. Synchronizing automatic withdrawals with payroll deposits will make budget management easier.