Author Topic: I Messed Up on Car Purchase - Any Advice Is Appreciated!  (Read 3394 times)

truxtian

  • 5 O'Clock Shadow
  • *
  • Posts: 5
I Messed Up on Car Purchase - Any Advice Is Appreciated!
« on: December 28, 2014, 10:14:28 PM »
Hello all!

Boy, I need some advice. I purchased a 2011 Ford Edge a few months ago before discovering MMM. Wow, had I just found this site just 2 months before the purchase... sighs

So here is my situation:

Ford Data:
  • Loan left on Ford Edge: $25,700 @ 1.5% APR
  • I did buy the pre-paid maintenance and repair package
  • Trade-in Value: $17,900
  • Monthly Payment: $500
  • Miles on car: 31.5 K
  • MPG in City: I am averaging 17.5

Personal Data:
  • I am single, 42, no kids.
  • I drive mainly in town (buying a bicycle next week or so for errands - about 75% of my driving is within 2.5 mi., except for church, which is about 10 mi away)
  • I work from home 4 days a week, drive 63 mi into office 1x a week, or 1x every 2 weeks, depending.
  • I drive to weekly dr appt's 2x a week - 35 mi each way.
  • Neither commutes are currently negotiable.
  • I currently have no cash reserves left, as I just paid off the last of my CC debt this month with what I had left.

So, given the tenets of Mustachiansim, I would like to get rid of this beast I am buying, and get a cheaper car, with better gas mileage. I was thinking of something along the lines of a Toyota Prius.

Prius Data:
  • 2005 Model
  • MPG: 60 city (I could weep. this is over 3x my current mpg)
  • Miles: 116k
  • Price: $8900

--------------------------

I would love to get some ideas and feedback on fixing this. I realize I will have to eat the 7k differene on the Ford.

Given all that data, and given I have no cash reserves right now, here is what I was thinking:

BofA Visa has a 0% APR for one year on balance transfers. So what I though was:

  • Write check from Mastercard to cover the 7k loss on the Ford.
  • Purchase car on MasterCard (I could prob find for about 8k).
  • Transfer both to Visa for 0% APR.
  • This would give me a 15k debt on the car, but I would be saving 10k over finishing paying for Ford, and I would save a ton on gas - prob around $150/mo.
  • If my tax refund and bonus at work hold the same as last year, I would get a total of 13k around March, which I can use to pay off the Prius and the 7k loss.
  • I would be aggressively paying the car in the meantime (1-1.5k / mo)

Is this a good plan? Is it insane and do I deserve a punch in the face?

Any help you guys can give me would be greatly appreciated - because of this site, I have paid off all my CC debt in record time, and I want to get the car situation handled before I start aggressively saving again, and start looking hard at my current house purchase / mortgage.
« Last Edit: December 28, 2014, 10:20:53 PM by truxtian »

GreatNateVIII

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #1 on: December 28, 2014, 10:24:04 PM »
I think you should just eat the payments until you figure out how much your bonus will be. If you wait you could take the approx 13k, eat the $8,000 in negative equity and buy a car for 5,000. I know you want to remedy the car situation but patience might be for the best in this scenario.

mxt0133

  • Handlebar Stache
  • *****
  • Posts: 1559
  • Location: San Francisco
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #2 on: December 28, 2014, 10:27:17 PM »
I would go to KBB and find out the used price, you are going to get screwed if you take the trade in value, then go to craigslist, carmax, autotrader, ebay, and see what a similar car to yours is going for.

Then sell, when you do the transaction do it at you local bank branch, neutral and safe.

I would look for an auto loan that you can handle vs the credit card idea where you have to keep transferring the balance, remember you still have to pay some kind of transfer fee.

TerriM

  • Pencil Stache
  • ****
  • Posts: 507
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #3 on: December 28, 2014, 10:42:42 PM »
I guess I haven't tried the passing CC balances around to 0% cards trick, but the idea of taking on a CC loan that could potentially blow up to 18% instead of sticking with a 1.5% auto loan worries me.  I suspect others will say it's fine.

But also, a 2005 Prius could require a new battery at some point soon.  Once source I found online set the cost at around $4K.  Has this one had its battery replaced yet?

ClaycordJCA

  • Stubble
  • **
  • Posts: 112
  • Location: SF Bay Area
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #4 on: December 28, 2014, 10:43:36 PM »
One of the reasons the balance left on the Edge is so high is that you are paying the maintenance costs for the next x number of years. You have to figure that into your analysis. It's going to take several years to make up that $7900 - assume you are now using 21 gallons a week @$3.00 a gallon - $63 a week on gas. Prius will use 7 gallons -or $21. You save $42 a week.  It will take 188 weeks to make up the $7900, plus whatever you spend on maintenance for the Prius.  You also run a risk that the bonus will not meet your expectations and then won't be enough to pay off the credit card.  You should also check the fine print on the 0% credit card rate since one of our cards makes the same offer but levels a 4% transaction fee upfront. Personally, I would be more concerned with building up an emergency fund before taking any action on the car. 

TerriM

  • Pencil Stache
  • ****
  • Posts: 507
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #5 on: December 28, 2014, 10:46:16 PM »
Is the maintenance agreement transferrable?  (and how many years does it cover?)
« Last Edit: December 28, 2014, 10:49:37 PM by TerriM »

College Stash

  • 5 O'Clock Shadow
  • *
  • Posts: 76
  • Age: 24
  • Location: Midwest
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #6 on: December 28, 2014, 11:32:00 PM »
It seems like you also paid a lot more for your Edge than needed too :(. A family member recently bought one with a 7 year, 100k warranty, fully loaded limited 2014 for 30k. Again, not the wisest purchase, but a reasonable price for the value.

As for a prius, you could probably trade in the Edge for a nearly new focus, prius, sonata, etc.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #7 on: December 28, 2014, 11:57:54 PM »
Given how little you drive, a hybrid is likely not worth the money.

The best value will be a simple economy car. Think Civic, Cruze, Focus, Camry, Accord, etc. Most of these cars will have at least a 50% improvement in city mileage and even better on the highway, and be very inexpensive to maintain given you only drive <10k miles/yr. The best value on hybrids comes in the more you drive.

Amy

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #8 on: December 29, 2014, 12:26:19 AM »
My boyfriend just bought a 2009 Prius and he is struggling to get above 45 mpg. He is using all the tricks to save power, but it has never gotten above the high 40's.

truxtian

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #9 on: December 29, 2014, 12:10:51 PM »
Thanks everyone. I think I got over-excited last night. Based on the measured responses, I think I am going to wait until I get the bonus, then eat about 5k (at that point), and get something like a Scion xA or xD. They are about 6k for a 2005-2007 model, and are actually Toyotas. I should be able to pay for it cash at that point.

Thanks again for all the help!

DeltaBond

  • Pencil Stache
  • ****
  • Posts: 526
  • Location: U.S.
Re: I Messed Up on Car Purchase - Any Advice Is Appreciated!
« Reply #10 on: December 29, 2014, 12:16:36 PM »
I'll get getting out from under a car loan as well, but I'm using a tax return to do it.  Dave Ramsey advises people in some cases to take out a personal loan to do it, but in your situation, I wouldn't do that, personally.

As for a prius - After being in a wreck in a small car, and being friends with someone who was in an accident in a Prius last month (5 surgeries later she still has a few surgeries left)... well, your car, your choice, but I wouldn't bother with a hybrid.  And yes, batteries for those are crazy expensive.