What to do about my car.......

[Minnie_me]

I am currently separated from my husband and am trying desperately to reduce my spending. I've already sold my home, and will be saving about $700 a month on the mortgage.

Now I'm looking at my car. I'm currently upside down on my car loan, but my payment is over $400 a month.

Is it a better move to hang in there and pay it off?

Or is it better to get a less expensive car?

I am absolutely CLUELESS when it comes to these things. This board has helped me a LOT!!!

 

[msmayor]

Regardless of whether you hang on to this car or get another, you'd still be paying off the "upside down" part. You can't escape it.

How much longer until the car is paid off?

 

[Minnie_me]

How much longer until the car is paid off?

Two and half more years! I don't mind hanging onto it. But if I can do this cheaper, by getting a less expensive car, I will.

 

[DawnM]

I have no idea what your credit rating, etc...is, nor do I know what kind of car you have now or the interest rate, BUT,

you might want to look into trading it in for a more economical car. A stripped down Honda civic or Toyota corolla for example. The upside down part will be added into the new loan, but it still might significantly lower your payments and you can ask for 0% interest as well.

Dawn

 

[MooGooGai]

I would hang on to it, pay it off and then drive it for years to come.

Good luck to you.

 

[BridgetBordeaux]

There are a lot of variables to consider.

If the present car is safe and reliable and you expect it to be a good car for the next several years, then you might be best to hold on to it.

Most people are "upside down" the first few years they have a car loan. It is not unusual.

The key is to always try holding on to the car for 1-3 years after you pay it off. Other than the occasional expense of brakes, tires, a battery etc--automotive/financial gurus encourage us all to hang on to the car as long as possible. From a financial perspective, that is the wisest move unless the car experiences a catastrophic failure.

We have a 98 model with 110k and a 2002 with 170k in our garage right now.

So far this year, we replaced 8 tires and 1 set of back brakes. The cost was about 2 or your car payments and we expect those parts to give us about 3-4 years of service for our money.

 

[BridgetBordeaux]

Welcome to the boards MooGooGai

 

[brota]

If it is car that should last you many more years you could maybe look into AAA to refinance it. I did extend my car a nother year at a better rate so I ended up saving $50 per month.

 

[msmayor]

Two and half more years! I don't mind hanging onto it. But if I can do this cheaper, by getting a less expensive car, I will.

The only way this would make sense is if you have the cash to pay off the upside down part of the car. If you do as another poster suggested...trade this in for a cheaper vehicle...you'll automatically be upside down on the NEW vehicle and while you may have a lower payment, you'll be paying longer on this car.

And with 30 months remaining on a $400/month car loan, rolling what's left of the loan into a new loan makes NO sense at all. That's a huge chunk of change.

Your 'cheaper' new car will end up far more expensive.

 

[WDWorBUST]

I would not sell or trade at this point. The last three cars we have bought we bought brand new....but we drive our cars until the wheels fall off. If the payment is more than you can comfortably handle I would see about refinancing it IF you can get a decent interest rate and add an extra year to it.

 

[dancin Disney style]

The only way this would make sense is if you have the cash to pay off the upside down part of the car. If you do as another poster suggested...trade this in for a cheaper vehicle...you'll automatically be upside down on the NEW vehicle and while you may have a lower payment, you'll be paying longer on this car.

And with 30 months remaining on a $400/month car loan, rolling what's left of the loan into a new loan makes NO sense at all. That's a huge chunk of change.

Your 'cheaper' new car will end up far more expensive.

I am a former car sales person.....the above advise is excellent and what I would also offer. Getting a new vehicle will cost you far more than paying off what you have now.

 

[Tink-aholic]

Please be careful about either selling assets or encumbering new debt before your divorce. It could have significant consequences.

 

[wdwfan16]

Keep your car and run it into the ground before replacing it.

 

[Minnie_me]

THANKS SO MUCH for the advice. I called the soon-to-be-ex and told him that I'm keeping it. He's not happy (long story), so that's probably a sure sign that I'm doing the right thing - LOL!

 

[mrsklamc]

It MIGHT make sense to sell the car, even underwater- depending on how underwater you are. If it's an amount you could pay off after just a few months of really buckling down, it might be worth it if those few tight months get you into a car payment you might comfortably afford.

There are lots of factors, like whether your credit will allow for refinancing the car or if you can bring cash to the table from the sale of your house, whether you have other debt, whether you can take on a part time job or sell something to bring cash to the table. I recommend a credit union for refinancing if possible.

 

[4HppyCamprs]

I would just like to add that refinancing your car is seldom a good idea. I have never been able to make the numbers work to my benefit. The PP example of saving 50.00 a month but extending payments for 12 more months would save you 1500 over the next 30 months but would cost you 4200 for the extra year of payments at 350.00 a month. Unless there is some savings I am not considering refinancing has never been worth the numbers I get.

 

[ctinct]

Please be careful about either selling assets or encumbering new debt before your divorce. It could have significant consequences.

This.

 

[brota]

I would just like to add that refinancing your car is seldom a good idea. I have never been able to make the numbers work to my benefit. The PP example of saving 50.00 a month but extending payments for 12 more months would save you 1500 over the next 30 months but would cost you 4200 for the extra year of payments at 350.00 a month. Unless there is some savings I am not considering refinancing has never been worth the numbers I get.

I was able to add a year and reduce my rate by 2% points