Car Crisis

[ERock]

So this is for my roommate who is having a pretty tough time. His car wouldn't start when he was coming back from his family Thanksgiving and had to be towed. Today he was told they finally got the car to run but it made a loud noise when running. When they checked it out, there was something wrong with the engine (I can't remember what he said it was exactly). He said they would not recommend driving the car and it would need a complete engine replacement. They quoted him $4,900 for a used engine, which does not include installation or other parts needed during the installation.

His credit score is not great, around 600.  His car is a 2008 Mercedes C300 sport package (I know, don't get me started) with about 120k miles on it. Getting another car is his only viable option, he works too far to bike and the public transportation here was voted one of the worst in the country.  He has no savings and basically lives pay check to pay check.  I asked him about taking a loan out from his 401k but he says there isn't enough in it.  Any ideas/ advice would be very helpful. Thank you!

[ketchup]

First he should get a second opinion on the car. 

Assuming the car is indeed toast:

What he should do: Sell the car to a Mercedes enthusiast (there's always someone), buy a $500 beater and cut expenses to the bone and save up for a decent car to purchase after the beater croaks in a year.  After purchasing said decent car, savings will continue in order to avoid being in this kind of situation (car related or otherwise) again.

What he will do (given his history): finance something stupid at a stupid interest rate given his credit.

[marty998]

But there is still public transportation? Just because people voted it down doesn't mean it doesn't exist. Even if he has to do a mix of walking/biking/bus/train it would be an interim solution.

Hopefully this will be a lesson learned for him to (a) take care of his car and (b) have a buffer in place for emergencies.

[Askel]

The mechanic is trying to rip him off. 

There's <$2k mercedes C300 motors for days on ebay right now. 

[kimac]

That mercedes is going to continue to be trouble. Sell it. It would be the sunk cost fallacy to hold on.

Then, go on autotrader.com or cars.com.
Limit the search to

• < 10 years old
• < budget ($2-4k?) (holding back 500-1000 for repairs, inspection, taxes)
• how far he is willing to travel.

Then sort by mileage lowest to highest, and pick the first few that are in good condition from a reliable brand (Toyota, Honda, maybe a few others).
Test drive, negotiate conditional upon inspection, and get it inspected by a mechanic (especially important with an older car)!

He may have to live without some of the niceties he's gotten used to in a Mercedes...

[ERock]

Thanks for the replies!

What he should do: Sell the car to a Mercedes enthusiast (there's always someone), buy a $500 beater and cut expenses to the bone and save up for a decent car to purchase after the beater croaks in a year.  After purchasing said decent car, savings will continue in order to avoid being in this kind of situation (car related or otherwise) again.

I think that is an excellent idea and suggested he do this. But he is reluctant because he thinks it'll take a long time to sell it. The mechanic is giving him until next Tuesday to do something with it or they will start charging him a storage fee. I'm gonna keep pushing for this option though. I also suggested getting a second opinion so we will see how that goes.

But there is still public transportation? Just because people voted it down doesn't mean it doesn't exist. Even if he has to do a mix of walking/biking/bus/train it would be an interim solution.

I have never personally taken public transportation here but I do know we have it. I looked up public transportation from around where we live to an area close to where he works and it said it would take 1 hour and 19 minutes, assuming the bus was on time. It typically takes 30 minutes by car.

The mechanic is trying to rip him off. 

There's <$2k mercedes C300 motors for days on ebay right now. 

I just talked to him again and he said the price included installation, just not anything extra they may need during the installation like hoses, etc. It still seems like a lot of money though.

That mercedes is going to continue to be trouble. Sell it. It would be the sunk cost fallacy to hold on.

Then, go on autotrader.com or cars.com.
Limit the search to

• < 10 years old
• < budget ($2-4k?) (holding back 500-1000 for repairs, inspection, taxes)
• how far he is willing to travel.

Then sort by mileage lowest to highest, and pick the first few that are in good condition from a reliable brand (Toyota, Honda, maybe a few others).
Test drive, negotiate conditional upon inspection, and get it inspected by a mechanic (especially important with an older car)!

He may have to live without some of the niceties he's gotten used to in a Mercedes...

That is a great suggestion as well and one he will probably be more willing to do.

Any suggestions on the best way to sell the car? Since it makes a loud noise when running I would think that would scare away any individual who wanted to test drive it. Would selling it to a dealer be the best way for the most value?

[surfhb]

Looks like he just needs to eat shit for awhile until he can save for a decent used Japanese car.    Ive been there too....so I know how it feels.    An extra 45 to get to work is nothing!

Maybe this will teach him a good life lesson.    Did you direct him to this site?

[ketchup]

But there is still public transportation? Just because people voted it down doesn't mean it doesn't exist. Even if he has to do a mix of walking/biking/bus/train it would be an interim solution.

I have never personally taken public transportation here but I do know we have it. I looked up public transportation from around where we live to an area close to where he works and it said it would take 1 hour and 19 minutes, assuming the bus was on time. It typically takes 30 minutes by car.

That's actually not too bad (as far as bad American public transit goes).  My commute is 25 minutes by car, and by public transit it's 30 minutes of walking, 50 minute bus ride, and then 20 minutes more walking, in order to arrive at work half an hour early.  It kind of sucks, but I've done it when need be.  Short-term it wouldn't be the end of the world.

[ERock]

I offered to take him to work on days I don't have school, so a few days of the week he wouldn't have it so bad.

The problem with public transportation around here, besides being unreliable, is we were also voted one of the 10 most dangerous cities in the country (#5 - Birmingham, AL) and the specific area we live in is known to have a lot of crime (but it's also cheap!).

[rockstache]

Take the car to carmax for the least hassle option.

[Wicked1]

He should buy a scooter.

[surfhb]

He should buy a scooter.

Bingo!  +1

Welcome Wicked!

[ChpBstrd]

Sell the Mercedes on Craigslist for $1000 or whatever first offer he gets. He will need to have it towed home unless the mechanic will buy it. Spending nearly 5k on a 10 year old car is a big nope.

Search Craigslist for something like a 10 year old Toyota Yaris, Nissan Versa, Mazda 2, Chevy Spark, Kia Rio, Hyundai Accent, etc.

The best deals are wrecked cars with damage that is purely cosmetic. You get the same reliability for $1-2k less, and a completely different depreciation curve. i.e. when grandpa hits a parked car and the kids finally talk him out of driving, you buy his low mileage $3500 car with $2000 in body damage for $1500. Also, rust bucket cars are cheap. If the floor's not falling through, the damage is only cosmetic.

Avoid European brands (VW, BMW, Mercedes, Fiat) due to astronomical repair bills.
Avoid Fords (Mercury, Saab, Lincoln) because the transmissions always go out.
Avoid Chryslers because... well... lots of reasons.
Note that GMs have lots of electrical problems, but also depreciate quickly enough to make a used GM worth the hassle.

[ERock]

Take the car to carmax for the least hassle option.

I had not thought about carmax, good option!

Sell the Mercedes on Craigslist for $1000 or whatever first offer he gets. He will need to have it towed home unless the mechanic will buy it. Spending nearly 5k on a 10 year old car is a big nope.

Search Craigslist for something like a 10 year old Toyota Yaris, Nissan Versa, Mazda 2, Chevy Spark, Kia Rio, Hyundai Accent, etc.

The best deals are wrecked cars with damage that is purely cosmetic. You get the same reliability for $1-2k less, and a completely different depreciation curve. i.e. when grandpa hits a parked car and the kids finally talk him out of driving, you buy his low mileage $3500 car with $2000 in body damage for $1500. Also, rust bucket cars are cheap. If the floor's not falling through, the damage is only cosmetic.

Avoid European brands (VW, BMW, Mercedes, Fiat) due to astronomical repair bills.
Avoid Fords (Mercury, Saab, Lincoln) because the transmissions always go out.
Avoid Chryslers because... well... lots of reasons.
Note that GMs have lots of electrical problems, but also depreciate quickly enough to make a used GM worth the hassle.

I have to agree, spending $5k on a 10 year old car doesn't seem like the best thing to do.  Buying wrecked cars that are only cosmetic is a great idea! Thank you!

[NoStacheOhio]

He should buy a scooter.

That's actually not a bad idea, especially if you can find one gently used (seller tried it and didn't like it). In Alabama, the weather shouldn't be too bad. My wife's boss rides her scooter to work ~9 months out of the year here in Cleveland.

[surfhb]

Take the car to carmax for the least hassle option.

I had not thought about carmax, good option!

Sell the Mercedes on Craigslist for $1000 or whatever first offer he gets. He will need to have it towed home unless the mechanic will buy it. Spending nearly 5k on a 10 year old car is a big nope.

Search Craigslist for something like a 10 year old Toyota Yaris, Nissan Versa, Mazda 2, Chevy Spark, Kia Rio, Hyundai Accent, etc.

The best deals are wrecked cars with damage that is purely cosmetic. You get the same reliability for $1-2k less, and a completely different depreciation curve. i.e. when grandpa hits a parked car and the kids finally talk him out of driving, you buy his low mileage $3500 car with $2000 in body damage for $1500. Also, rust bucket cars are cheap. If the floor's not falling through, the damage is only cosmetic.

Avoid European brands (VW, BMW, Mercedes, Fiat) due to astronomical repair bills.
Avoid Fords (Mercury, Saab, Lincoln) because the transmissions always go out.
Avoid Chryslers because... well... lots of reasons.
Note that GMs have lots of electrical problems, but also depreciate quickly enough to make a used GM worth the hassle.

I have to agree, spending $5k on a 10 year old car doesn't seem like the best thing to do.  Buying wrecked cars that are only cosmetic is a great idea! Thank you!

Wrong.    If you do your research those are the best cars to purchase.    Some people buy cars and never drive them    Finding a good toyota or honda with under 100K miles @ $5K is totally doable

[ketchup]

Take the car to carmax for the least hassle option.

I had not thought about carmax, good option!

Sell the Mercedes on Craigslist for $1000 or whatever first offer he gets. He will need to have it towed home unless the mechanic will buy it. Spending nearly 5k on a 10 year old car is a big nope.

Search Craigslist for something like a 10 year old Toyota Yaris, Nissan Versa, Mazda 2, Chevy Spark, Kia Rio, Hyundai Accent, etc.

The best deals are wrecked cars with damage that is purely cosmetic. You get the same reliability for $1-2k less, and a completely different depreciation curve. i.e. when grandpa hits a parked car and the kids finally talk him out of driving, you buy his low mileage $3500 car with $2000 in body damage for $1500. Also, rust bucket cars are cheap. If the floor's not falling through, the damage is only cosmetic.

Avoid European brands (VW, BMW, Mercedes, Fiat) due to astronomical repair bills.
Avoid Fords (Mercury, Saab, Lincoln) because the transmissions always go out.
Avoid Chryslers because... well... lots of reasons.
Note that GMs have lots of electrical problems, but also depreciate quickly enough to make a used GM worth the hassle.

I have to agree, spending $5k on a 10 year old car doesn't seem like the best thing to do.  Buying wrecked cars that are only cosmetic is a great idea! Thank you!

Wrong.    If you do your research those are the best cars to purchase.    Some people buy cars and never drive them    Finding a good toyota or honda with under 100K miles @ $5K is totally doable

I assumed he meant spending $5k to fix the 2008 Mercedes was a bad idea.  Which I would agree with.

[Car Jack]

You do need to be careful with old, low mileage cars.  We have an 04 Outback that we bought from my father in law after his wife passed.  1 owner car, always dealer serviced.  It needs a timing belt (105k miles or 105 months), the engine sounds like it's about to explode, already replaced a CV axle because the boot split.  The car had only 45k miles when we bought it.  I'm neglecting a lot of stuff now because we plan to limp the thing going forward probably till it dies.  Have a CEL for the cat converter (would have been replaced under warranty if my FIL actually drove the thing while he had it, but now it's timed out) which is $1200 for the part at the cheapest place anywhere.  The good news is someone drove into the side of it so I collected $1800 from insurance and pounded much of the dent out myself.

C/N, older, low mile cars can need thousands in maintenance due to time.

[surfhb]

Take the car to carmax for the least hassle option.

I had not thought about carmax, good option!

Sell the Mercedes on Craigslist for $1000 or whatever first offer he gets. He will need to have it towed home unless the mechanic will buy it. Spending nearly 5k on a 10 year old car is a big nope.

Search Craigslist for something like a 10 year old Toyota Yaris, Nissan Versa, Mazda 2, Chevy Spark, Kia Rio, Hyundai Accent, etc.

The best deals are wrecked cars with damage that is purely cosmetic. You get the same reliability for $1-2k less, and a completely different depreciation curve. i.e. when grandpa hits a parked car and the kids finally talk him out of driving, you buy his low mileage $3500 car with $2000 in body damage for $1500. Also, rust bucket cars are cheap. If the floor's not falling through, the damage is only cosmetic.

Avoid European brands (VW, BMW, Mercedes, Fiat) due to astronomical repair bills.
Avoid Fords (Mercury, Saab, Lincoln) because the transmissions always go out.
Avoid Chryslers because... well... lots of reasons.
Note that GMs have lots of electrical problems, but also depreciate quickly enough to make a used GM worth the hassle.

I have to agree, spending $5k on a 10 year old car doesn't seem like the best thing to do.  Buying wrecked cars that are only cosmetic is a great idea! Thank you!

Wrong.    If you do your research those are the best cars to purchase.    Some people buy cars and never drive them    Finding a good toyota or honda with under 100K miles @ $5K is totally doable

I assumed he meant spending $5k to fix the 2008 Mercedes was a bad idea.  Which I would agree with.

AH yes.... i missed that

[kimac]

C/N, older, low mile cars can need thousands in maintenance due to time.

I would agree, TCO over 5 years is best with a car that is 2-4 years old. The problem is you need a bit more up-front capital, which seems to be an issue here.

Edmund's True Cost to Own tool is great, it estimates everything (including maintenance and repairs) based on historical data: https://www.edmunds.com/tco.html
Here's a chart of year 3 vs year 10 maintenance costs for different makes: https://www.consumerreports.org/car-maintenance/the-cost-of-car-ownership/
Here is a breakdown of maintenance costs for different makes by various factors (though missing an overview IMO): http://www.popularmechanics.com/cars/a23877/car-maintenance-costs-mileage/

As they say, you make your money when you buy---finding a good deal shouldn't be that hard with very relaxed criteria. Just focus on cheap, entry-level, low-mileage, reliable brands.

Taking public transit for a few months to sell the Mercedes and save up / find a good deal seems appropriate. He can think of it as penance for buying the Mercedes :D.

[wpgdude]

Has your roomate priced out what his car would sell for used, running and in good shape?  While it seems crazy to spend 5k on a 2008 mercedes, the car is worth next to nothing right now, and if running he could sell it privately for 6-7K it might be worth it to fix it and immediately sell it privately. 

Many years ago I was in the same position, except with a toyota.  The engine blew the oil pan gasket and the highway and by the time I stopped the motor sufferred permanent damage.  I wasn't able to get more than $500 for it in that condition, so I bit the bullet, repaired the car and immeditately sold it for 5K afterwards. The repairs cost me ~3k. 

If the costs outweight what he can get, I agree get a scooter or a late 90's/early 2000's corolla. They might be ugly but they run forever.

[ERock]

Thank you for all of your comments/ suggestions! They have been very helpful!  A quick update that may change things/ may not but I'd love to get some input on this as well.

He told me today he still owes around $3,500 on the car and has been calling around trying to find the best offer from a dealership.  He said Ford told him they have a rebate on their new Focus (not sure if its 2017 or 2018 or both) for 4,000 which would pay the remaining amount he owes for the Mercedes.  He is still talking to them so he doesn't have any details on interest rate or trade in amount he would get.

I personally think Fords are pretty unreliable from what I've heard but have never owned one myself.

[afuera]

First he should get a second opinion on the car. 

Assuming the car is indeed toast:

What he should do: Sell the car to a Mercedes enthusiast (there's always someone), buy a $500 beater and cut expenses to the bone and save up for a decent car to purchase after the beater croaks in a year.  After purchasing said decent car, savings will continue in order to avoid being in this kind of situation (car related or otherwise) again.

What he will do (given his history): finance something stupid at a stupid interest rate given his credit.

Looks like ketchup was right.

[ketchup]

First he should get a second opinion on the car. 

Assuming the car is indeed toast:

What he should do: Sell the car to a Mercedes enthusiast (there's always someone), buy a $500 beater and cut expenses to the bone and save up for a decent car to purchase after the beater croaks in a year.  After purchasing said decent car, savings will continue in order to avoid being in this kind of situation (car related or otherwise) again.

What he will do (given his history): finance something stupid at a stupid interest rate given his credit.

Looks like ketchup was right.

I didn't want to be right, but hey, it wasn't too hard to call.

[ChpBstrd]

Thank you for all of your comments/ suggestions! They have been very helpful!  A quick update that may change things/ may not but I'd love to get some input on this as well.

He told me today he still owes around $3,500 on the car and has been calling around trying to find the best offer from a dealership.  He said Ford told him they have a rebate on their new Focus (not sure if its 2017 or 2018 or both) for 4,000 which would pay the remaining amount he owes for the Mercedes.  He is still talking to them so he doesn't have any details on interest rate or trade in amount he would get.

I personally think Fords are pretty unreliable from what I've heard but have never owned one myself.

[Bicycle_B]

Yes, Ketchup nailed it.

Nonetheless, his best option is probably to use public transport. 

1. He's a student.  79 minute commute each way = 49 minutes of study time +30 min of staying alert at bus stops, getting a pleasant walk to clear his head, etc.  Net time spent on commuting plus studying:  exactly the same as a damn car.

2. He's upside down on the vehicle?  His situation will only get worse if he buys another car.  The dealer will make him more upside down on the next one.  He can't get out of debt by taking on more debt.

3.  Once he tells the first car's note holder he is carless and a student, they will secretly jump for joy if he commits to paying the balance via a small monthly payment.  If the current car runs, he can get enough from it to reduce the balance outstanding.   He can pay off the rest with just the money he would have spent on gas for the replacement car.

4.  The no-car plan saves purchase money, insurance money, financing costs and repairs on the new vehicle, even if he pays the old note balance out of pocket. 

[ERock]

Well ketchup was right.  -_-

In case anyone wanted to know, he went with a new car.  On the bright side, they did pay him 1k for his old car (also paying for it to be towed on Monday so he doesn't have to pay storage fees or towing fees) plus a 3.2k rebate so he was able to pay off his previous loan with that and still had some to put towards the new car.  He also went with the cheapest car he could find on the lot (Ford Focus).  He hates it which seems to be motivating him to pay it off.  He told me he is going to get a second job to pay it off as fast as possible.

Thanks for all of your help and input! I'm going to work with him to try and put together a budget so he can start making better financial decisions.  I'll probably post that on here too under case studies in the near future to get ideas on where he can improve.

[Sibley]

I have a ford focus. hope it doesn't have the transmission issues.