28 August 2007

This car thing -- help needed!

I am having a vehicle dilemma so I am soliciting advice from all quarters.

Summary -- Totaled my trusty Mazda in December. Sarah and I shared a car until March, when our frustration and impeding baby led us to Carmax and a Subaru Impreza Outback Sport. We had some bank issues, so we had to finance through Carmax. The Impreza has 99K miles, but runs great and looks fine for being 10 years old.

So what's my problem? Well, it bugs the crap out of me that I may very well be making payments on a car with 150K miles, since we financed for five years. I feel I made a number of mistakes in buying this car. It's too old to have paid what I paid for it. The interest rate kinda sucks. Also, while it runs great and looks fine, it is ten years old and that shows in spots (a few seat stains, lamp covers that no longer fit, etc). Additionally, the insurance on this car is relatively high, for some reason. I have 55 payments left. Ugh.

I've been whining about this car for awhile now, so I am trying to take action. This is a good week to get a new one, as it is model-year clearance on most of the 2007's.

The way I figure it, I have four options:
1. Get a new car, probably a Civic.
Pros: I have a new car, which I have never had before. It will be reliable, under warranty, and I'll be able to drive it for a long time. It will look good and I'll feel good driving it. I'll get a lower interest rate. My insurance will probably go down, or will at least not go up.
Cons: My car payment will double. This will stretch our finances a bit. I'll have to add the money I still owe on the Subaru to any new car purchase. Taxes will be higher on the new car.

2. Get a different used car, probably a Civic
Pros: A nicer car, one I can drive for a long time (hopefully even after it's paid off). Reliable, maybe a warranty. Feel better about driving it.
Cons: Still a used car. Maybe not as much wiggle room on the price, especially when you factor in the Subaru balance. Still a used car, even if a nicer one.

3. Keep Subaru, but make new car payments on it to pay it off quickly
Pros: Subaru paid off faster. Can then trade it in or dive it till it quits.
Cons: Still have Subaru AND big car payment, at least for a couple of years

4. Suck it up and keep on keeping on
Pros: Manageable payment on decent car
Cons: Will be paying on the car awhile. Will continue to be annoyed at my car mistake. Will car make it until paid off?

So, any advice? I have to make a decision quickly!

4 comments:

  1. My advice is
    "3. Keep Subaru, but make new car payments on it to pay it off quickly
    Pros: Subaru paid off faster. Can then trade it in or dive it till it quits.
    Cons: Still have Subaru AND big car payment, at least for a couple of years"

    Pay it off faster. Make double payments if possible. Get the payments taken care of. The longer you wait, the more interest you are going to pay, so you might as well make bigger payments now, pay it off faster, and save a little money in the long run. Just make sure that there is not an early payoff penalty in your finance agreement. Once you get this one paid off, then you can think about getting a new or almost new car. Don't take on additional debt just because the car isn't exactly what you want. In the end, a car is just another tool. Your tool works, and it's not too bad. Why get another tool and have to pay on both of them.

    As for the insurance, have you looked into another company to see if you can get a better rate? Is the insurance and car in your name, or Sarah's? Women often get better rates on their insurance. Or, combine both cars onto one policy, if you already haven't done so. L & I were just talking about having to do that with our policies (I'm not really sure why we have not done it already).

    Rich

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  2. The best value in purchasing a car is buying something used under 3 years / 30k miles and never financing more than 4 years (if you can't afford it in 4 years, you need a less expensive car -Clark Howard advice). Doesn't help you with the current car, but may help set some guidelines for the next car, whether that is sooner or later.
    Insurance - while your personal demographic plays in, so does the vehicle you choose.
    Insurance is probably high because it is an all-wheel drive, which means the insurance company is looking at a purchasing pool that at least nominally goes off road (therefore, more damage), and with a vehicle that is generally more expensive to fix. Civic insurance would be lower, relatively.
    I think Rich's advice is good. to educate yourself, www.edmunds.com, You may want to see if you could even (realistically) get for the car what it would take to pay off the loan in full (i.e. you may be currently "underwater" if you stetched an old car out to a 5 year financing term), and thus the immediate sale may not be an advisable option (and Rich's advice becomes really the only good advice).
    If you aren't "underwater" you may want to consider cutting your losses at even, selling, and starting over (with the above guidelines).
    You're an acadmic, noboby expects you to drive anything but a beat-up wreck ;).
    WS

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  3. Great comments thus far. I am pretty sure I am upside down in the car, at least a bit. The weird thing about these Subarus is their blue book value seems to be much lower than their market value. When I bought the car, I did do some research, and saw comparable cars going for comparable prices, even though the bank told me the car was overpriced according to the blue book. That confused me.

    And, while I am supposed to be driving a beater, shouldn't it be a Volvo or MG or something? :)

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  4. Ok, I am not the person to be asking this type of question to, due to the fact that I like new shinny things and don't really care too much about the financial end of a situation other than can I aford it at my present state.

    My sole advice is do whatever makes you happy! You have talked or questioned this car for some time now. Fuck it. Trade it in on something that you want, payments that you are happy with, insurance that makes sense and something you look cool in. Happyness is the key.

    Its really easy to be happy at the present moment while down the road regretting it. I am really good at understanding this so I know whatever choice I make now I am going to stick with it and be happy with it.

    My current car situation is this I bought a new car when I didn't really need to buy one. It was damn cool though and I finally owned a brand new car. I structured my car payments over 5 years and now after 4 I have only three payments left . I haven't had any problems with the car other than general maintenance (tires and oil). When it is all paid off I will wait 3-4 months then probably get a new one.

    Its all a game and I like to play. I'm not the one to keep score or even worry about the rules - I just enjoy playing.

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