BAD DECISION OR NO?

I have a friend who has fallen on hard times.  He lost his job after a series of mini-strokes and his wife was already out on disability. His car was reposed when he couldn't keep up the payments.  But now things are turning around for him.  His disability was approved and he will shortly get his first check along with back pay of around $20,000.00.  His plan  to purchased a used vehicle.  The one he has picked out is $12,500.00 of which he plans to pay $10,000.00 and finance the rest, the pay off the remainder of his bills.  That would leave him essentially broke again.  Then there is the matter of his reposed car.
   I suggested that he get his old car back which would cost him $750.00 (two payments and the towing/lot fee)  the have fixed anything that is wrong with the car.  I then suggested he open a checking account and an investment account with an automated draw of $200.00 per month to a max of $300.00 a month.   At an average draw of 7% interest  over the long haul he would make $1050.00 a year in interest  on $15000.00   and draw down $2400.00 at a draw of $200.00 a month.  The interest would pay for half his car payment, he would still have a nice nest egg in case of an emergency
  Once his car is paid off (three years, I believe) maybe his credit score will have improved enough to afford him the ability to purchased a car at a lower interest rate.  He could get a credit card with a low ceiling and pay it off every month to build his credit faster.  Six years ago I could not borrow a nickel even if I had a dime as collateral ( a situation created because someone embossed $30,000 from my business and left me in debt).  I now have a credit score of 806 and a small car payment.  I did finance the building my church is using.  I could pay the loan off and carry the debt and make a little from interest but then I would have to pay federal income tax on the amount of the loan which would cost me more than the current plan is. 
  I think my friend would be better off investing the money instead of buying something that will depreciate.  I know the newer car is nice but it isn't needful.  What do you think?