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.
