Need help with my car situation

[Huskie87]

Hello all, I appreciate any help and advice you can give me.

I have been reading the blog for several months and have put many 'best-practices' into action.  I'm doing a lot more home/auto maintenance and repairs on my own and have upped my 401k saving to speed up my FI date.  My problem is that I made a mistake in 2013 by purchasing a brand new Chevy Cruze for $16,000 AND bought a 100,000 mile bumper to bumper warranty for an additional $2,000.  Looking back I wish I hadn't done this, but all I can do is make smart decisions moving forward.

I found a 2006 Chevy Cobalt for sale, 140,000 miles and listed at $2,500.  On the one hand, it would be nice to sell my Cruze for roughly $12,500 and use the proceeds to pay off my remaining $8,000 car loan AND purchase the Cobalt in cash AND have roughly $2,000 in my pocket.  However, I worry that this is actually just a short term way of thinking and that the necessary repairs/maintenance on the Cobalt over the full time frame will actually trump the remaining balance on my auto loan.

Since my Cruze has a full btb warranty, there will be no repairs for roughly the next 5 years.  Also the loan is at 1.59%, which is below the rate of inflation.  While it would nice to be debt free, I feel like I might be doing myself a disservice by selling off a 3 year old car just so I can stop making monthly car payments.  As long as I continue to maintain the car, I can conceivably drive this for the next 15 years, if not longer. Over that full time-frame, I'd most certainly spend more by purchasing several older cars and maintaining them.

Again, I appreciate any help or advice!

[rubybeth]

How essential is a car to your daily life? If you've got a longer commute that isn't bike-able, or you need a vehicle for work or something (like dropping a kid at daycare while you're at work), I might say just to keep it and try to save as much as you can elsewhere, as the interest rate on the vehicle is so low. If you could, however, start walking/biking places and use the vehicle minimally (like for grocery shopping or out of town trips), then I might suggest ditching the Cruze for something in between a newer car and the Cobalt, like a $5,000 vehicle--I am thinking you could explain the situation to a dealer that has both new and used vehicles, and tell them your requirements and have them look for a vehicle that fits your needs and budget.

[Huskie87]

thanks rubybeth.  I actually start a new job next week that requires me to travel for the first 3-6 months for training...roughly a 100 mile round trip.  I know this is a crazy commute, it's going to add two hours a day to my work routine, but it's only temporary.  Then I'll have about a 10 mile bike ride to work that I might be able to navigate. 

I'll have to look around on this forum for insights into how business professionals pull off the bike commute (I work with financial advisors).  Also, I live in Minnesota and I'm not nearly bad*ss enough to bike during the winter!

[rubybeth]

I also live in Minnesota! Honestly, I walk to work but biking would be tough for me with the snow. I walk about a mile, so that's really not bad, but I have my limit on cold days and will opt to drive if it's below zero.

In your case, it sounds like a reliable vehicle is going to be needed for the next six months, and then maybe not so much. Could you wait on the car decision until after the training?

[Huskie87]

yeah i think that's the right thing to do.  I was excited at the prospect of removing some of my debt, but I just don't think its the right time to attempt this.

[obstinate]

My impression of American cars during that period is that they are not that great. We didn't really start turning things around r.e. reliability and fuel economy until the '08 crisis and subsequent government bailouts of various auto companies. Buying a Toyota or a Honda from that window would be fine though.

I'm all for optimizing, and I think it's great that you recognize that the Cruze was a suboptimal decision -- you are right about that. But I would say this is not a super urgent change. You've probably already suffered a lot of the depreciation. That's not to say you shouldn't make the change, just don't beat yourself up about it. You can look in my post history to see me agonize through a similar decision, and I lost a lot more than you will. :)

[Fishinshawn]

http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

I think if it were me I'd sell the cruze and buy one of these vehicles.  I think buying the used cobalt would be a mistake, just because I don't think they are very reliable.  I sold a gas guzzling jeep wrangler and bought a pontiac grand prix, I wish I had been more mustachian and gotten one of the vehicle son that list.  My plan now though is to sell the grand prix to my teen age son who really likes it, and get one of the 4dr hatchbacks on that list.

[VaCPA]

Just pay the Cruz off and drive it for a long time enjoying no car payment. The warranty will keep maintenance costs very low for awhile. It's not like you can get the money back. I don't think selling it and buying a beater will work out any better long term.

[Huskie87]

Thanks everyone.  I think my best bet is to keep the car, maintain it as best i can over the next 10+ years and vow to never buy another new car again.

Live and learn!

[alsoknownasDean]

Yeah it'd be worth keeping for at least the period when you have a long commute.

Whilst yes, it would definitely be optimal to get rid of it and buy a tidy $4500 car with the difference, there are a few factors to consider:

- A Cruze isn't that bad a vehicle. It's not like it's a Tahoe or similar.
- What's your current financial situation? FIRE, or hair on fire?
- What is the general condition of used cars in Minnesota? (if you were to buy another car, would you be better off buying out of state to avoid rust issues?)

If you were swimming in debt (large credit card balances and high-interest student loans and the like), I'd say sell it and free up a few hundred a month to kill the other debts. If you're otherwise debt-free, then just keep it for the next decade or so.

[KarefulKactus15]

Ill also chime in.

I dont think the cruze is great car.     But, DO NOT SWAP FOR THE COBALT.   That would be the ultimate icing on the "mistake" cake.   

The Cruze is an american made vehicle, you have already taken the huge depreciation hit.  Pay it off, and if you absolutely hate it still, whenever that time comes then sell it and get something else.

Excellent VALUE  (not price) japanese cars can be had around 7-8k$ on craigslist.


Summary: Stay in your current ride. Pay it off.  Come back to us at that time for further guidance.  (The tribe has spoken) 

[rvg]

Hello all, I appreciate any help and advice you can give me.

I have been reading the blog for several months and have put many 'best-practices' into action.  I'm doing a lot more home/auto maintenance and repairs on my own and have upped my 401k saving to speed up my FI date.  My problem is that I made a mistake in 2013 by purchasing a brand new Chevy Cruze for $16,000 AND bought a 100,000 mile bumper to bumper warranty for an additional $2,000.  Looking back I wish I hadn't done this, but all I can do is make smart decisions moving forward.

I found a 2006 Chevy Cobalt for sale, 140,000 miles and listed at $2,500.  On the one hand, it would be nice to sell my Cruze for roughly $12,500 and use the proceeds to pay off my remaining $8,000 car loan AND purchase the Cobalt in cash AND have roughly $2,000 in my pocket.  However, I worry that this is actually just a short term way of thinking and that the necessary repairs/maintenance on the Cobalt over the full time frame will actually trump the remaining balance on my auto loan.

Since my Cruze has a full btb warranty, there will be no repairs for roughly the next 5 years.  Also the loan is at 1.59%, which is below the rate of inflation.  While it would nice to be debt free, I feel like I might be doing myself a disservice by selling off a 3 year old car just so I can stop making monthly car payments.  As long as I continue to maintain the car, I can conceivably drive this for the next 15 years, if not longer. Over that full time-frame, I'd most certainly spend more by purchasing several older cars and maintaining them.

Again, I appreciate any help or advice!

I would however look into cancelling the extended warranty - $2000 is quite a bit. Take that $2k, pay down your higher interest debt (or invest.) Chances are, your car is not going to need $2k worth of work under 100k miles.

[jayholden]

Whatever you do, don't buy another Chevy. http://longtermqualityindex.com/