Author Topic: Keep Car or Sell it?  (Read 4028 times)

SingleMomDebt

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Keep Car or Sell it?
« on: June 15, 2014, 08:24:18 PM »
I calculated my expenses and found out that I am spending $700/month for my car (service, gas, insurance, loan). I did a bunch of personal research about getting out of my car loan ($334/month) – only part of the $700 equation. And getting a cash only car. But its important to me, as a single mother, to have a reliable car. So I am up in the air about what to do.

someone ran into me 2 weeks after I moved into my new place and totaled my car. The insurance company delayed getting payment to me because of paperwork issues... yada yada. I ended up financing a car because I had to rid of the rental car and get into a car. I did not have the cash to buy a used car.

The car loan is upside down about $5500. I owe approx 18,000 on it @ 1.75 APR. It does have a 125,000 bumper-to-bumper warranty.

A friend told me to buy a used car (I am thinking will need appox $3000 for cash car) and some extra amount away for potential increased maintenance costs. But would like some more feedback.

There are 4 options for me:

  • Have the car repo’d, pay difference, end up with no car.

    Cons: The whole 'repo' thing is a problem. ha. But my job is not near the train. I commute 50 miles round-trip (hey, I was doing 80 miles round-trip for 8 years. Am a wee bit closer now). Need car.
  • Finance new used car (used cars equates to higher finance APR of approx 5%) and roll over old car loan.
     
    Cons: That doesn’t work. I am upside down on current car (by approx $5.5K), plus costs of new used car, and now a higher APR for used car. You can see why that doesn’t work, right?!
  • Save up to pay down the ‘upside-down’ portion and buy cash-only “clunker” car ASAP. Equates = $8,000.
     
    Reasonable solution. But whats the increase on maintenance costs for said ‘clunker’? Concern is time it will take to save up $8000. The car will most likely not be upside down by that time (I round up my car payment to $350 some months and $400 when I can).
  • Keep my 2012 current car for 10+ years that has a 125,000 bumper-to-bumper warranty with 1.75% APR, and continue to pay down in “Gazelle” order. Total interest paid = $900 approx. Pay down bi-weekly for less interest paid. Car costs $18,000 remaining.

    It just irks me having so much debt. And knowing said car payment ($334 could go to pay off debt)

I have across a DR article about possibly negotiating with my bank (who currently owns the car) about releasing the title to new owner and writing a new loan (approx 10% APR for personal loan) for the remainder of the car owed (http://www.daveramsey.com/blog/how-to-sell-an-upside-down-car). But I already spoke to my CU about that when I first transferred my car loan to them. They will not do the mentioned, as they say, because I already have a Personal Loan with them and cannot add to or add another until the current PL is paid off.

This is as bad as figuring out what to do about my cell phone bill. LOL. Thank you in advance for your feedback.

After writing this.... I wonder if slow & steady wins the race. Just continue sending in more than my monthly payment when I can, continue taking good care of current car and keep it many, many years.

Currently has 40K. So approx 18K-20K year in mileage. Kelly Blue Book is 12,250. That was a recent update. So I guess I am $5.5K upside down. Info has been updated.
« Last Edit: December 02, 2017, 10:05:24 PM by Moonrise »

avongil

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Re: Keep Car or Sell it?
« Reply #1 on: June 15, 2014, 09:13:49 PM »
Need more info. How many miles do you drive per year?  What is your current vehicle?  Your loan is low % so its going to depend on miles and mpg really.

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SingleMomDebt

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Re: Keep Car or Sell it?
« Reply #2 on: June 15, 2014, 09:21:17 PM »
updated the info in the original post.Currently has 40K. So approx 18K-20K year in mileage. Kelly Blue Book is $12,250. That was a recent update. So I guess I am $5.5K upside down. Info has been updated. Thank you.
« Last Edit: December 02, 2017, 10:05:47 PM by Moonrise »

avongil

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Re: Keep Car or Sell it?
« Reply #3 on: June 16, 2014, 06:02:59 PM »
Keep the car. The initial depreciation money is lost and you cannot get it back. You cannot really do better buying a used car considering it gets good fuel mileage.

Check, #32, I happen to have one on there since we were considering one.   You can download this and fill in your own numbers. After you pay the car off the monthly expenses will be around 1/2 so in the long run you will spend less than the 700 you calculated.

https://docs.google.com/spreadsheet/ccc?key=0Ajeg4z5XrypmdE0yanpJSTlLTHFjbmV1eEU4cE9Ma0E&usp=drive_web#gid=0

Keep it an move on, you wont have to spend any time or money fixing and buying a used car to replace this now used car.  Do keep it long and maintain it well. 

In 10 years when it's time to get another one, just take your time and get a 1 or 2 year old used car (electric by then ) that has taken that initial huge depreciation dump.  No matter how you slice or dice it, the economy of it is the same or approaching that of a considerably older car that needs to be replaced more often.


frugaliknowit

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Re: Keep Car or Sell it?
« Reply #4 on: June 17, 2014, 11:28:55 AM »
I would keep the car and make paying off the loan a priority.  Next time buy smarter, but at this point it doesn't seem worth trying to undo a 2 year old car that gets good mileage.

avongil

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Re: Keep Car or Sell it?
« Reply #5 on: June 17, 2014, 06:48:03 PM »
Yeah, just brush it off and don't think about it. There is little you can do to save money now. Next time, 1 - 2 year old and keep it for 10 years! That's without a doubt the cheapest way to roll. 

By that time, electric cars will be as popular as a Prius is today and you can grab a 2 year old electric and really save some bucks!



SingleMomDebt

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Re: Keep Car or Sell it?
« Reply #6 on: June 17, 2014, 10:34:29 PM »
Keep the car. The initial depreciation money is lost and you cannot get it back. You cannot really do better buying a used car considering it gets good fuel mileage.

Check, #32, I happen to have one on there since we were considering one.   You can download this and fill in your own numbers. After you pay the car off the monthly expenses will be around 1/2 so in the long run you will spend less than the 700 you calculated.

https://docs.google.com/spreadsheet/ccc?key=0Ajeg4z5XrypmdE0yanpJSTlLTHFjbmV1eEU4cE9Ma0E&usp=drive_web#gid=0

Keep it an move on, you wont have to spend any time or money fixing and buying a used car to replace this now used car.  Do keep it long and maintain it well. 

In 10 years when it's time to get another one, just take your time and get a 1 or 2 year old used car (electric by then ) that has taken that initial huge depreciation dump.  No matter how you slice or dice it, the economy of it is the same or approaching that of a considerably older car that needs to be replaced more often.

 feel like its a 'trying to keep up with the Joneses' but doesn't quite have the stature of it (not happy with the dashboard) - in fact had the dashboard replaced because the digital numbers went out on me and I couldn't see how many miles or how much gas I had left!)
« Last Edit: December 02, 2017, 10:06:42 PM by Moonrise »

SingleMomDebt

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Re: Keep Car or Sell it?
« Reply #7 on: June 17, 2014, 10:35:55 PM »
I would keep the car and make paying off the loan a priority.  Next time buy smarter, but at this point it doesn't seem worth trying to undo a 2 year old car that gets good mileage.

Thank you, frugaliknowit for your feedback. Since the car has a rather low APR, its lower on the list of priorities. However, I do round up my payments. I saved a lot of money doing that on my last car.

SingleMomDebt

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Re: Keep Car or Sell it?
« Reply #8 on: June 17, 2014, 10:37:15 PM »
Yeah, just brush it off and don't think about it. There is little you can do to save money now. Next time, 1 - 2 year old and keep it for 10 years! That's without a doubt the cheapest way to roll. 

By that time, electric cars will be as popular as a Prius is today and you can grab a 2 year old electric and really save some bucks!

That would be 1-2 year old bought with cash. ;) Thank you, Avongil for your feedback. Stuck with the car it is.
« Last Edit: December 02, 2017, 10:12:16 PM by Moonrise »