What would you do in my shoes? (Car question)

Discussion in 'Bad Dog Cafe' started by naveed211, Sep 28, 2021.

  1. naveed211

    naveed211 Friend of Leo's

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    TLDR: Sell current car, eat a couple thousand in the loss and buy a cheap car, or keep the car I have and pay more on it in about two years or so?

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    I just started getting serious about paying down debt. Problem is, I took out a car loan less than a year ago, so I still have a lot to pay off (Loan was a bit more than it typically would’ve been as I rolled some negative equity into that, too).

    I’d like to break the cycle. Get out of this car loan now and just pay off a car right away (I’ll have about $3500-4000 bucks in savings in the next few months) if at all possible. But, again, with negative equity I’d be looking more at cars worth about $2000.

    Is it even worth it to expect a car that cheap to be reliable? I haven’t driven a car that cheap since high school (And shortly after that my bad spending habits started).

    I also have a credit card I’m paying down (paid off two, one to go). So I’d probably take all of next year paying that off, while also having a bit set aside for an emergency fund.

    Trying to figure out which way to go on this plan.
     
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  2. ReverendRevolver

    ReverendRevolver Friend of Leo's

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    The whole thing depends on you finding a replacement vehicle in that range, which in itself is a very localized thing. In the last 10 years, we've gotten used vehicles from $700-$4000, and the cheapest lasted months, the $4k one went through 2 different occurrences of caliper pins seizing, and got rolled into negative equity on a $13000 brand new car. The ~$2200 van has been better than the $4k thing, but we've been very fortunate that everything that has broken was a $200 or less repair that I could do.

    You need a vehicle, current market is fickle. Used vehicles are a dice roll. Growing up, 3 of the 4 Chrysler Van's we had lasted 3 years or less. The 4th went towards trade after 5 years. Never know. I'd prefer something where I know what's going to break is fixable, or under warranty new.

    Good luck.
     
  3. JL_LI

    JL_LI Poster Extraordinaire

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    The negative equity is a gotcha but I believe the problem is how you look at it. Debt is debt. You owe on a card and a loan. Forget that it’s a car loan for a minute. The card probably has the higher interest rate. Pay that off as fast as you can. Keep making payments on the loan. If the card gets paid off first, put what you were paying on the card toward the loan. When both are paid off, decide to keep or sell the car based on your circumstances and your needs. You may decide to keep the car if it’s been reliable. Zero balance on your card and having paid off the loan will raise your credit rating making a loan on your next car less costly for each thousand borrowed.
     
  4. dkmw

    dkmw Poster Extraordinaire

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    If it’s a new car loan at the ridiculously low rates going these days, you’re probably better off keeping the loan going. A $2000 car and you’re going to be paying the equivalent of a car loan in repairs.
     
  5. StoneH

    StoneH Tele-Meister Silver Supporter

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    My two cents: We just helped a grandson buy his first car (2009 Honda Accord) for almost $10K. We looked for months and didn't see anything near $2K or even $5K that was worth the reliability risk for an 18 year-old that will be paying his own insurance and repair bills.

    Best of Luck!
     
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  6. naveed211

    naveed211 Friend of Leo's

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    Thanks. I’d likely look at all imports in that range. I’ve had good luck with Toyota previously, or an old Honda. Stuff like that. But still, it would be really cheap.


    Thanks. I have given that route some thought, too. That’s good perspective.


    True. The one I have is a 2013 Hyundai with 67k miles. Should be pretty reliable for the next couple years I’d hope.
     
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  7. dogmeat

    dogmeat Friend of Leo's

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    get new shoes??

    seriously... pay off which ever has the highest interest rate first (card) drive the car until it bleeds out of every hole.
     
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  8. naveed211

    naveed211 Friend of Leo's

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    Thank you. Yeah it’s definitely a dice roll. The cheap cars I had in high school did the trick for their time, but it is a risk getting something that cheap I do realize. And if it’s in the shop constantly, the wife and kid will be affected obviously. So that’s a consideration.
     
  9. naveed211

    naveed211 Friend of Leo's

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    Good perspective, and vivid picture!
     
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  10. String Tree

    String Tree Doctor of Teleocity Ad Free Member

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    I would recommend paying down the highest Interst Debt First.
    Make separate Principal Only payments to supplement the regular payment.
    If I had Two-Cents, that would be it.
     
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  11. Killing Floor

    Killing Floor Friend of Leo's

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    Used cars are selling for much higher value this year so you may not get the deal you want. If it’s a couple thousand “loss” to sell I’d keep it due to low supply / high demand for used vehicles. That’s just me. I have a car I would like to upgrade and I want to help my kid who is about to graduate college and in both cases the cars we have are OK and there’s nothing available to trade up to without paying way too much. If you can wait a year to change cars that’s what I would do.

    Also you shouldn’t wear other people’s shoes because it isn’t good for your feet.
     
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  12. naveed211

    naveed211 Friend of Leo's

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    All good points! Thanks!
     
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  13. naveed211

    naveed211 Friend of Leo's

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    I value your perspective more than two cents worth!
     
  14. Cpb2020

    Cpb2020 Tele-Meister Silver Supporter

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    If you can find a car that is reliable in that range (I haven’t looked in that range in quite a while), then for me it would be a no-brainer. I’d do it. Then what you’d be paying towards the car loan goes to the other debt.

    And if you are driving around in a $30k car and you can’t find a reliable $2k car, you can consider taking out a loan for $3k, buy a $5k car, and still get out from under the $30k car in an effort to get rid of the debt. $3k in car debt is better than $20k+ in car debt. It isn’t an all or nothing approach.

    My only caveat would be if your salary puts you in a position where you can pay off the non-car debt in a reasonable time (under a year), and the type of car that you have makes sense for your given salary, then I don’t think it would be crazy to keep it.
     
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  15. Rustbucket

    Rustbucket Poster Extraordinaire Platinum Supporter

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    I agree with your philosophy of selling the more expensive car and buying a cheap but reliable import. Used car prices are pretty high these days. You might wait until you find a deal before pulling the trigger if you are able.

    I agree the CC is probably the worse of the evils, but with no car payment, you can double down on your card payments.
     
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  16. Timbresmith1

    Timbresmith1 Tele-Afflicted

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    How many times can you afford to miss work or get stranded ?
    Car payment for reliable vehicle/ not futzing around with cars is a good trade off imo.
     
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  17. Rustbucket

    Rustbucket Poster Extraordinaire Platinum Supporter

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    Sorry, but I can't help myself...
     
  18. Preacher

    Preacher Friend of Leo's

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    OK I am not a financial advisor, got that out of the way.

    I would look at a couple of things. First is the interest rate on the CC versus the car loan. I would imagine the CC is higher so use that $$ to pay down that debt.
    As far as a car, you are underwater currently, I would drive what you have if it is relatively new and issue free. An older car will sound good in the short run but might cost you more in the long run with repairs.
     
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  19. naveed211

    naveed211 Friend of Leo's

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    Thanks for the counterpoint, something to consider. I’d be able to pay off the credit card and have a decent amount of savings (so as not to dip into the card right away again) in about a year and a half. The trick would be , as you said, finding a reliable cheap car I’m comfortable with in this scenario.
     
  20. bgmacaw

    bgmacaw Poster Extraordinaire

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    Car prices, used and new, are crazy right now. A $1000 high mileage beater in 2019 may $4000 or so now.

    For example, I traded in my awful 2015 Chevy Sonic (71k miles) a few months ago and the dealer, instead of sending it right to auction, sold it for $10k within a week or so. It was the cheapest used car on their lot. They were selling Japanese and Korean small cars with higher miles (100k+) in the 12k to 17k range. I've also been told that I could sell my new 2021 Ford Ranger for more than what I owe on it. Insane!

    You may want to wait until car prices stabilize somewhat, hopefully when supply chain issues get resolved. But, there's also the looming specter of inflation which will send prices higher anyway although if you have significant loan debt this might not be all bad.
     
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