Author Topic: Clown Car Conundrum  (Read 3793 times)

dlawlor

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Clown Car Conundrum
« on: February 17, 2015, 04:06:45 AM »
Hello all! My fiance and I are recent converts to an intelligent mustachian life of responsibility, but we have one remaining stumbling block tying us to our spendthrift past: our cars.

Assets:
2013 VW Golf, 45k miles, (17k on Edmunds)
2011 Chevy Camaro LS, 25k miles, (14k on Edmunds)

Debts:
21,000 on the VW (paying $512/mo)
10,000 on the Camaro (paying $396/mo)

We're looking to get out of these loans and get some nice efficient clunkers, but want to know just how to move. We need to get to work, so can't afford more than a one or two day layover with less than two cars. Also, the VW has to move before the Camaro. I don't want there to be a delay between the two and look like I'm asking her to trade her car (the Camaro) without me taking initiative on my own.

Do I throw money at the VW loan to get it our from underwater first? Can you even sell a car with so much owed on Craigslist/any private sale?
Do I resort to buying something reasonable from a used car dealer, in order to carry the remaining debt to a much smaller car loan on the replacement?

Any suggestions?
Thanks

ShoulderThingThatGoesUp

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Re: Clown Car Conundrum
« Reply #1 on: February 17, 2015, 04:14:46 AM »
Do you have enough to buy a reasonable car without a loan after you sell the VW? Not paying $512/month has a payback time of two and a quarter years if you can get the next one for $10,000 cash.

Is the right answer to move closer to one or both of your jobs, so you don't need two cars?

dlawlor

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Re: Clown Car Conundrum
« Reply #2 on: February 17, 2015, 05:23:04 AM »
Not really. If  I get 17k for it, I pretty much only have enough to close out that loan (about 4-5k).
We are putting asid just over 2k/mo now, so it might take a bit before getting in shape for that. We hope to be putting away about 3k/mo after were out of these car loans.

Moving wouldnt help much. Although I commute 20 miles each way, she barely goes 5. Any closer to her work and rent values skyrocket.

Stash Engineer

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Re: Clown Car Conundrum
« Reply #3 on: February 17, 2015, 06:03:51 AM »
Given that you don't have the cash reserves to buy a car outright after selling your VW, I'd go the trade in route.  Figure out what you would be willing to take on the VW and don't be scared to walk away from any dealership that doesn't at least come very close (within $500) to your number.  Have copies of your car's value from KBB and NADA (maybe true car and autotrader also) to substantiate your requested trade-in value.  Luckily, those two cars are both in high-demand, so that should help.

Retired To Win

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Re: Clown Car Conundrum
« Reply #4 on: February 17, 2015, 06:20:40 AM »
...We need to get to work, so can't afford more than a one or two day layover with less than two cars.

Why not use a rental car as an optional bridge between selling the car you have and replacing it with the car you should have?  Hopefully, there's a "rent a wreck" outfit in your area!

Good luck.

RunHappy

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Re: Clown Car Conundrum
« Reply #5 on: February 17, 2015, 06:28:41 AM »
Is there public transportation or ride sharing you can use?

paddedhat

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Re: Clown Car Conundrum
« Reply #6 on: February 17, 2015, 06:49:56 AM »
Given that you don't have the cash reserves to buy a car outright after selling your VW, I'd go the trade in route.  Figure out what you would be willing to take on the VW and don't be scared to walk away from any dealership that doesn't at least come very close (within $500) to your number.  Have copies of your car's value from KBB and NADA (maybe true car and autotrader also) to substantiate your requested trade-in value.  Luckily, those two cars are both in high-demand, so that should help.

It might help to understand how a dealer values cars before making a fool of yourself with "blue book" numbers and other fantasies, printed from websites. Every dealer has a buyer. This person is responsible for restocking the used side of the shop, and they really couldn't care where their stock comes for, as long as they bought it right. In the case of  your VW, after they inspect your car, and do a search for any prior history available to them, they then take a look at what your vehicle would cost them at the local, dealer only, auctions. THIS figure determines the value of their vehicle, and may, or may not, be remotely close to figures from KBB, NADA, or any other "online experts". If they can buy yours for a number that's comparable to their auction costs, they will. If you want $17K, and they are bringing  $15.5K wholesale, you aren't getting you number from the buyer, BUT that doesn't mean that you won't close a deal, and tell all your friends that, "they offered $15.5K, but I held out for $17K"  Because the buyer forwards their offer to the sales side of the shop, and they do whatever they need to do to make the deal work, if they can. In the end however, the buyer still pays the $15.5 he offered.  The spread between the lowest number you are willing to pay, and what the buyer paid for your trade-in comes for whatever padding is built into the car you are buying.

The best way to get around this game? Either sell the VW privately, or spend some time and take the car to a few dealers and ask what they would give you for it?  Don't do a lot of talking about how much you owe, or why you are selling, just stick to the facts. If you are seeing a pattern of offers, say in the $16K range, you now have a true value of what your car is worth in your market.  Now you have valuable information to use when you trade it in. You know what the buyer is actually willing to pay for your car and you can work your way through all the BS, and figure out exactly what they expect you to pay for the car you are attempting to buy.

KCM5

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Re: Clown Car Conundrum
« Reply #7 on: February 17, 2015, 07:42:48 AM »
Not really. If  I get 17k for it, I pretty much only have enough to close out that loan (about 4-5k).
We are putting asid just over 2k/mo now, so it might take a bit before getting in shape for that. We hope to be putting away about 3k/mo after were out of these car loans.

Moving wouldnt help much. Although I commute 20 miles each way, she barely goes 5. Any closer to her work and rent values skyrocket.

Bicycle? Bus? Can you drop her at work on the way to your work or something like that? My husband and I share a car and while I normally bike if it's too cold or snowy I'll drop him at work (8 miles), then drive to my work (7 miles from his work). It's not perfect but if you're only doing it for a month or so while you're figuring out the cars you can do it. Who knows, you may even decide you only need one car (oh, the savings!).

GetItRight

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Re: Clown Car Conundrum
« Reply #8 on: February 17, 2015, 08:16:45 AM »
Not really. If  I get 17k for it, I pretty much only have enough to close out that loan (about 4-5k).
We are putting asid just over 2k/mo now, so it might take a bit before getting in shape for that. We hope to be putting away about 3k/mo after were out of these car loans.

Save for 1-2 months until you have $2500 or so to buy a car, then sell the VW AFTER you have your replacement car. This also gives you a bit of cushion to go over the new car, drive it a bit, and do any minor things it may need before it's your only transportation.

It would make a lot more sense if you have $5k savings to just buy a $2500 or so car to replace the Camaro, then put it for sale and get what you can for it since you owe less than you expect to sell it for. Then repeat with replacing/selling VW but from a stronger financial position. If the wife complains give her the option of either driving your reasonable replacement car or the new luxury VW. It's silly to worry about it as you'll both be driving sensible vehicles that you actually own soon.

Dimitri

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Re: Clown Car Conundrum
« Reply #9 on: February 17, 2015, 08:27:22 AM »
In the past two years I've sold two cars to CarMax.  You bring in the car and they appraise it and make you an firm offer irrespective of whether or not you are interested in buying a car from them.  In both cases I was strictly selling.  I found their offers to be fair and was pleased to accept both of them.  Whether or not you take their offer at least you will have a benchmark price which you can use as a starting point if you decide to sell your cars privately.

RunHappy

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Re: Clown Car Conundrum
« Reply #10 on: February 17, 2015, 10:35:17 AM »
In the past two years I've sold two cars to CarMax.  You bring in the car and they appraise it and make you an firm offer irrespective of whether or not you are interested in buying a car from them.  In both cases I was strictly selling.  I found their offers to be fair and was pleased to accept both of them.  Whether or not you take their offer at least you will have a benchmark price which you can use as a starting point if you decide to sell your cars privately.

Carmax is great is you are just selling a car, but not if you're trying to get the most money to pay off an auto loan.

Forcus

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Re: Clown Car Conundrum
« Reply #11 on: February 17, 2015, 10:43:07 AM »
Sell the Camaro privately. It has to go first because you don't have much savings and you have (potentially) positive equity.

Take the $2-3k you will net and buy a cheap, reliable beater. This is harder in some places than others. Both of your cars are somewhat sporty so I'm guessing that's what you are drawn to, so maybe an older Miata, Cavalier Z24, Focus ZX3, something late 90's early 2000's that is not complicated to work on. MAYBE a 90's Jetta but they can be nickel and dime cars. No BMW, Audi, MB.

Save up enough to offset the negative equity on the Golf and try to keep the miles off of it. Right now is a pretty good time to sell, tax time, so don't miss that window.

Find something similar as the $2-3k above.

If you are willing to go older, 944's are a viable option but they are older, and depending on your commute, may not be doable. But they are cheap and readily available.