Need advice on my car situation

[Polket]

Hey Everyone,

I'm at a dilemma here. So, I have a car that I bought in 2010 for $15,900, back then it was used and had 35,000 miles on it. I'm a car enthusiast (I have cooled that down so I no longer want to waste money on overpriced high performance cars) and so because of that, back then I thought it was a good idea to buy this high performance mazdaspeed6 car. It is a really fun car but I'm still $7,500 in the hole right now on it. I bought it for $15,900. Brand new this car was $34,000 so at least I didn't make that mistake! :)

However, my new mustachian ways, realizing that it is absolutely pointless to have a car like this for daily driving, and now a longer commute to work (20 minutes there and back) has caused me to start thinking about selling the car. But my mentally driven problem with this is, I know the car... I have done the maintenance on it, I know how it drives and when something is wrong with it. I know its past and where it's coming from. When buying a used car however, you are most likely buying someone else's problem. So there will be hidden quirks and issues that you will need to figure out after you purchase the car. I don't want to really go through that.

Current car payment is $260 a month, insurance is $80 a month. Current mileage on the car is 90k. I spend about 150-200 a month on gas due to the car getting only 19-22 MPG (280+ horsepower will do that). My thought is to buy a used car that is in the best condition I can get for $1,500 - $2,000, then start driving that and sell off the mazda. After selling the mazda, roll some of the extra money into the newly purchased used car to completely fix it up so I can get another couple years or so out of it.

I plan to go to the police auctions and buy a car from there. They usually sell dirt cheap and are perfectly good cars. Most of the time they are cheap because a door is smashed in or what not. But I so happen to have a mechanic in the family and I am sort of a car knocker on the side as well. So getting replacement parts (at the local junkyard) would be easy and I would have a perfectly good used car for cheap.

My current financial goal is to pay off my student loans. As it stands right now, i can throw 1,800 a month at the student loans. I have 40k to pay off, so i'm looking at roughly 2 years. If i were to be car payment free right now, i could tack on the additional 260 in savings a month to that and probably knock months off the student loan repayment. I want to pay off these loans ASAP.

Is it worth all of this effort, rather than just keeping my mazda, paying off the $7,500 and then driving it car payment free then on out until it turns to dust? Or, ditch it before major maintenance kicks in (probably at 120k miles) and I can save more money now month to month to help the student loan repayment?

Note: Another thing is that I live in Cleveland. Cars rust out here very very quickly. So this potential newly purchased used car could have a ton of rust issues and might not last as long as I hope. My current mazda doesn't have much rust yet.

thanks for the read!

[Thegoblinchief]

With a 20 mile commute, I wouldn't want a car that cheap. In my experience, $5-10K is the sweet spot for price/reliability. A $2K car could easily cost you more long-term, even if you DIY all repairs.

I would run the numbers, though. Outside of recouping a little equity, some fuel economy, and slightly cheaper insurance we are not talking a ton of money.

[Polket]

Yeah, that's my thought too. Plus, I drive through some bad neighborhoods to get to work. I would hate to break down in the middle of that.

I know the current car is reliable and it hasn't been beaten on for years. I baby the crap out of it.

[Polket]

Maybe, i could get a newer 5-10k used car that is better on gas. But like you said, would it be that much worth it? The gas difference would probably be a small amount and the risk of the newer car with hidden issues would be greater than the ROI i think.

EDIT: i could make more use of hypermiling as well on the current car

[eil]

Is part of your problem that your current car is now worth much less than the outstanding balance of the loan?

If so, you may not come out ahead in terms of leveraging the price different between current car vs its replacement, but I would totally do the trade just for the better gas mileage alone.

Ultimately it sounds like what's holding you back is fear of the unknown when it comes to buying a vehicle. "Buying somebody else's problem," you say. The cure for that isn't to avoid the situation altogether, it's removing the unknown. How? Research!

Don't just hit the auctions and classifieds without knowing exactly what you want. Read reviews and ratings to create a short list of cars that are plentiful, reliable, and have good fuel economy. (In my experience, this generally means the economy offerings from Japanese car makers like Toyota and Honda.) A good start is MMM's article "Top 10 Cars for Smart People": http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

Once you're out there looking at cars on your short list, you can reduce the mechanical uncertainties to a large degree by taking it to a trusted mechanic to get checked out. (A test drive goes without saying.)

Whatever you do, take your time and don't rush. Since you have a perfectly good car, don't sell it before you get its replacement. Not only will this help you stay relaxed during the search, it will help a lot with negotiating a fair price. Good luck!

[ketchup]

With a 20 mile commute, I wouldn't want a car that cheap. In my experience, $5-10K is the sweet spot for price/reliability. A $2K car could easily cost you more long-term, even if you DIY all repairs.

I would run the numbers, though. Outside of recouping a little equity, some fuel economy, and slightly cheaper insurance we are not talking a ton of money.

I would disagree with this if you're willing to be your own mechanic (or know someone willing to help you out).  My current car was $2000 and is 18 years old, and my last car was a $1000 25 year old car (that only is gone because of an unfortunate encounter with a Jeep).  My first car left us stranded once due to a bad clutch, because I was too un-car-savvy to notice a clutch going out at the time.  I've driven both hundreds of miles from home with no worries.  Little stupid old-car things have happened, but nothing debilitating besides the clutch incident. The only car that's left me stranded without it being my own fault was my mom's Saturn Vue that was 7 years old at the time.  As long as you are on top of everything, do preventative maintenance, are aware of everything going on, and make sensible choices, there's no reason a $2k car can't do the job of a commuter.  In fact, cars of that price and age are perfect for racking up commuting miles, because depreciation is essentially nothing at that point.

[Thegoblinchief]

The only reason I suggested a newer car is that major repairs can sometimes require putzing for a few days.

Nothing is worse than frantic repairs on a weeknight in a winter garage.

[rtrnow]

I don't think buying a car for 5-10k or even 2.5k would mean you're buying someone else's problems. Do some homework and check the car out of course. You can get a low mileage car like the fit as certified used with a 100k warranty at the top end of that price point if you want to rest a little easier. That's what I did.

The other thing I haven't seen you mention about the mazda is premium gas. I would assume since that's what's required, that's what you're running. So figure saving at least $0.30 per gallon in addition to the added mileage.

[Polket]

Is part of your problem that your current car is now worth much less than the outstanding balance of the loan?

Nope, actually i could probably make about 2-3k in profit if i sold it.

I would disagree with this if you're willing to be your own mechanic (or know someone willing to help you out).  My current car was $2000 and is 18 years old, and my last car was a $1000 25 year old car (that only is gone because of an unfortunate encounter with a Jeep).  My first car left us stranded once due to a bad clutch, because I was too un-car-savvy to notice a clutch going out at the time.  I've driven both hundreds of miles from home with no worries.  Little stupid old-car things have happened, but nothing debilitating besides the clutch incident. The only car that's left me stranded without it being my own fault was my mom's Saturn Vue that was 7 years old at the time.  As long as you are on top of everything, do preventative maintenance, are aware of everything going on, and make sensible choices, there's no reason a $2k car can't do the job of a commuter.  In fact, cars of that price and age are perfect for racking up commuting miles, because depreciation is essentially nothing at that point.

That's what I'd be doing, going the be-my-own-mechanic route, and lean on the mechanic in the family for help.

The other thing I haven't seen you mention about the mazda is premium gas. I would assume since that's what's required, that's what you're running. So figure saving at least $0.30 per gallon in addition to the added mileage.

Yup, the car needing premium gas is an issue. Does cost more for sure.

[FrugalZony]

Honestly, to me this sounds like logically you totally know what's the right thing to do* at the same time you love your current car and are somehow looking for validation/permission to do what you emotionally** would prefer to do ;)

No judgement, just an observation!
Only you can decide if it's worth it for you and what your priorities are ;)


*Cash in on the profit, get an older car, fix it yourself, as you seem to have all the mad skillz ;) to do so and throw every penny at that loan, that you so badly want to get rid off

**Keep your high performance car, because you still got a deal on it and love it

[Polket]

Haha, yeah i think either way I'm going to be satisfied... i did get a really good deal on the car initially. It should have been 20k at least but the guy I bought it from was just married and in desperate need for money and talked him down about 2k.

The only thing holding me back is the uncertainty of maintenance/breaking down risk that is involved in the new car. I'll just need to research more and really get a good look and drive of the car.