Author Topic: Get a car loan while in debt?  (Read 1551 times)

jayholden

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Get a car loan while in debt?
« on: May 27, 2016, 02:34:10 PM »
I drive 15k miles per year.

I currently have a lease for $317/mo that expires in August. I can terminate the lease early by paying off the amount due ($951).

I will need a vehicle to replace my current one.

I've found a hail-damaged 2010 Prius with 115k miles for $6,500, which is the lowest price (by $1k) for such a car I've seen in the past 2 months on a variety of sites, including Craigslist. This makes it competitive with my second and third picks, a Civic and a Scion xD.

I've put away $2,000 since mid April in anticipation of buying a vehicle when my lease ends. At this rate I'll have $4.5k if I wait until August to buy a car with cash, or $6.5k if I dip into my emergency savings.

Rather than save up for a replacement vehicle and paying for it in cash in August, I could instead take out a 3.19% loan for the Prius. Doing so would allow me to put that surplus cash into my ~6.5% APR student loan, and would reduce my monthly car cost from $317/mo to $176/mo. Over the 3 years of the loan I'll wind up a couple grand ahead by getting the Prius now.

At the same time, this does fit the definition of spending money I don't have.

What would you do?
« Last Edit: May 27, 2016, 02:53:49 PM by jayholden »

dcozad999

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Re: Get a loan for a Prius?
« Reply #1 on: May 27, 2016, 02:54:10 PM »
Is it still running on the original battery? If so it's probably ready for a new or reconditioned one or will need one soon.

The batteries can be pretty expensive, but just read this guy in 2014 got a reconditioned one installed for $800 which is very cheap.

http://www.forbes.com/sites/tonybradley/2014/04/09/replacing-a-dead-prius-hybrid-battery-doesnt-have-to-cost-thousands-of-dollars/3/#121c8a603715



Uturn

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Re: Get a car loan while in debt?
« Reply #2 on: May 27, 2016, 03:18:53 PM »
I would save as much as I could between now and August, and find a car that fits within the amount saved.  I would then put the amount that I have been saving, plus the $317/mo to the student loan.  However, I've been through all the various savings and debt cycles that you can imagine, so now my thinking is influenced by years of experience.  Other than a mortgage on a reasonably priced house in the correct markets, debt is an insidious thing to do to your future self. 

jayholden

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Re: Get a car loan while in debt?
« Reply #3 on: May 27, 2016, 03:23:39 PM »
Is it still running on the original battery? If so it's probably ready for a new or reconditioned one or will need one soon.

The batteries can be pretty expensive, but just read this guy in 2014 got a reconditioned one installed for $800 which is very cheap.

http://www.forbes.com/sites/tonybradley/2014/04/09/replacing-a-dead-prius-hybrid-battery-doesnt-have-to-cost-thousands-of-dollars/3/#121c8a603715


I read that same article. $800-$1200 isn't much if the battery lasts 5 years, that averages out to $200/year, which doesn't offset the gas savings at my level of driving.

FWIW the main battery is supposed to last "the life of the car" according to Toyota. Over on the Prius forums the majority of users report never having had to replace the battery.

Any opinions on the original question?

I would save as much as I could between now and August, and find a car that fits within the amount saved.  I would then put the amount that I have been saving, plus the $317/mo to the student loan.  However, I've been through all the various savings and debt cycles that you can imagine, so now my thinking is influenced by years of experience.  Other than a mortgage on a reasonably priced house in the correct markets, debt is an insidious thing to do to your future self.

Thanks, I appreciate it. No matter what, the leftover money will be going toward the student loan. It's just a question of how much and whether I can start in June or in September.

Choices

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Re: Get a car loan while in debt?
« Reply #4 on: June 26, 2016, 10:00:29 AM »
I would save as much as I could between now and August, and find a car that fits within the amount saved.  I would then put the amount that I have been saving, plus the $317/mo to the student loan.  However, I've been through all the various savings and debt cycles that you can imagine, so now my thinking is influenced by years of experience.  Other than a mortgage on a reasonably priced house in the correct markets, debt is an insidious thing to do to your future self.
+1. Your goal is to get out of debt, not go in deeper.

lightning hippo

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Re: Get a loan for a Prius?
« Reply #5 on: June 26, 2016, 06:46:34 PM »
Is it still running on the original battery? If so it's probably ready for a new or reconditioned one or will need one soon.

Highly unlikely for a 2010 Prius to need a replacement battery in the near future. If you research, you'll find the failure rate of the Prius battery is quite low.  Plenty of older Prii on the road with twice the mileage still running on the original batteries.