Dear Tom and Ray:

My wife and I are helping a friend who would be considered a member of the working poor. Like many, she is struggling to make ends meet, and we are trying to help advise her about her finances to hopefully help her get her head above water. Currently, she is in danger of falling behind and losing her home. About a year ago, she purchased a new Chevrolet Cobalt, and she's paying $378 per month on a 4-year loan, or approximately 26 percent of her income per month. We would like to help her lower her car payments. Our thought is to get rid of the Cobalt to cut her losses, and get into a new or used car at a significantly lower purchase price and lower monthly payments. What car would you recommend, either new or used, at $12,000 or less for someone in her position? We are looking for value, low maintenance and long life. Thank you for any advice and suggestions you might have. -- Steve

TOM: Well, if she's in a situation where she's in danger of losing her house, I don't think she should own a new car. A house appreciates as an asset and will be much more important to her financial future than a car, which loses value every single day.

RAY: So we agree with you -- she should sell the Cobalt. Hopefully she can get more for it in a private sale than she owes on her loan.

TOM: And she should spend less than $12,000 for a replacement. For $8,000-10,000, she can get something like a 5-year-old Honda Civic, Nissan Altima or Toyota Corolla. You'll get a better deal buying one from an individual than from a dealer. And if you're lucky, you can find one with 60,000-80,000 miles on it.

RAY: The Japanese made the most reliable cars of that era, and any of those cars would be good bets, provided the individual car gets a thumbs-up from a mechanic of your choice, who checks it out stem to stern before you buy it. This is crucial, Steve, so don't skip that step.

TOM: If you need the name of a good mechanic, go to the Mechanics Files on our Web site, www.cartalk.com, where our readers and radio listeners have recommended mechanics they personally use and trust.

RAY: Because your friend will be buying an older car, it's important that she know that vehicles of this era won't be maintenance-free. In fact, she should put aside some money every month for the inevitable repairs an older car will need. But even when you combine the purchase price with the repairs, you won't come close to the cost of financing a new car.

TOM: And then, if her economic situation improves in the next few years, she can always trade up to a newer or nicer car. Heck, maybe she'll be able to buy her Cobalt back. Wish her luck for us.