Getting rid of car loans
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| Tue, 06-08-2004 - 7:12pm |
Have any of you ever "down-graded" from a nice car (aka "new & prestigious") to an older, less prestigious make & model - just so you wouldn't have any more monthly payments? If so, how did you prepare yourself mentally to make this "downgrade?" And how much of a downgrade did you make (i.e. from a Lexus to a Toyota, Infiniti to a Nissan)?
I live in CA - where cars are definitely status symbols. My last two cars have been brand new and been relatively nice. When I decide on the model, I usually get the top one (BIG BIG mistake!!!). I also usually go the whole 9 yards - buying the deluxe packages. But now, I am so sick & tired of making monthly payments. I could just as well take that $350/mo and direct it toward my credit card bill or school loan. But last nite, I was looking for used cars and I just can't find any that I like. I mean - is it the Snob factor of going from new car to an old one? or is it the hassle of car haggling & making sure the car isn't a lemon? uuugh.... it seems like such a hassle, but when I think of all the money I can save, it (almost) overcomes my hesitation.
Have any of you been thru this before? How did it go? How long did it take you to decide to forgo the new car for an older one? Was it worth it?
Thanks for your insight!
~Claire

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I would certainly be willing to do that, but won't you end up with the remaining debt from your present vehicle as well as the financing for the "new" vehicle?
My problem is we're "upside down" on our truck - which we totally got worked over on.
Can't refinance because we owe more than it's worth.
Sorry, I don't mean to horn in on your post, but I think it's hand in glove with it. I mean I would love to do exactly what you are suggesting, but how can I?
I can't do anything with my car, but, it's in good condition, will be easy to repair since it's a GM, and it's a 4-door for when we start having babies...so I'm stuck with it! Hubby could get a good deal on a trade in, but how do you trade DOWN from a Toyota Corolla...? You don't... So, I'm stuck with both.
If you can get a good deal on a trade, and your payments will be lower, then go for it!
My hubby thinks of cars as a way to get from here to there...nothing more, nothing less. I like cars - A LOT! I'm always reading about cars and horsepower and alternative fuels and everything else....so I hate my Alero! But, I can't afford the cars that I like, so I'm stuck!
I wish I had some real pearls of wisdom, but I don't...sorry!
Tracie
As for the status symbol aspect, well, I would say that's more about deciding what is important to you personally and reminding yourself of these priorities when needed. I understand wanting to keep up with those around you. I grew up in CA and can tell you that like everywhere else, there are plenty of people who don't find cars to be a measure of your worth or personality or whatever. My friends would have laughed at me if I ever suggested that they should admire me for my ability to go purchase something. I still tell people that my year in CA with NO car was one of the greatest of my life - I walked everywhere, was in fantastic physical condition, and my life was so simplified I had time and money for fun with people. Awesome. I no longer live in a town where I could live without a car, and that is sad for me.
As for being upside down with a car loan, I don't know how that is measured, but I can almost guarantee we were upside down on our year 2000 loan when we traded it in. We had excellent credit, but mountains of debt. What allowed us to get into another vehicle was brand loyalty (went from one VW to another through a dealerhsip) and holding out for the terms we wanted. It took about a week of going to the dealership, being offered different terms and marching out the door when we didn't get them, only to be called back the next day or so. However, since they were VW dealers, they offered us what we owed on the car immediately - that part we didn't even have to ask for which amazed us. They finally relented to all our terms, but tried to tack on special warranties for around $1000 - watch these people, read everything, stand up for yourself, and don't get so attached to a car that you won't walk away if they are not being fair to you. Remember that the payment is just one way to save on a car, you can also save on insurance, fuel and maintenance costs if you choose the right car. Also, I have never used them, but apparently there is an Internet site that allows you to research a car's history. I would look into that, as well as any other research you can think of.
I don't know if this info helps in the least, but in short, going from a new car to a used car was, for me, a great decision that I have never regretted.
DH and I are trying to sell one of our cars.
All my best,
Danni
I worked for a major car company for five years and always drove a brand new, off-the-assembly-line car, turning it in after 12,000 miles for another one. When I left the company, I bought a 2yo used car because it was all I could afford. Having a car payment at all - my first in 7 years - was such a shock that I wanted to keep it as low as possible, so I adjusted *very* rapidly to driving a used car!
Everyone in my company (it's a small company) drives a nice car, except for me. In our parking lot right now there are 2 Audis, 2 BMWs, a couple of SUVs, and a Honda Accord, all of which are less than 3yo. I drive an 8yo Honda Civic, and you know what - I don't mind at all. It runs great, I keep it clean, and unlike my colleagues, I do not make a payment on it every month. It is one of the things that allows my DH to be a SAHD, because we don't have to fork over another $350 a month for a spiffy new car. In fact, I plan to keep it for another 2 years, during which time I will be paying for my oldest DD's braces and saving for the down payment to buy a used Subaru. I LOVE not spending that money on something I drive 17 miles to work and 17 miles home. I love that it is small, I can park it anywhere (unlike my colleagues in their SUVs), I don't worry about it getting dinged, and I get great gas mileage.
Kelly
My husband and I drive very basic cars. His, a 1997 chevy lumina with 200k plus miles. Mine, a 2000 Chevy Malibu. They will both be paid off in the next year. We are both getting a raise next month. In our old way of thinking, we could "afford" a bigger car payment, and would start car shopping now. But I am no longer willing to spend a life's fortune driving something in order to impress folks I don't like anyway, LOL! So few people are driving paid-off cars. I used to look at fancy new SUV's with a little envy, and now I just see a great, big load of debt driving around on four wheels.
We are not going to buy newer cars with our raises, we are going to put that toward paying off our debt. Our cars are in good condition, look and run just fine, there is no reason to upgrade other than 'status'. We will save up to buy the next vehicle outright. It won't be all that long until, with my debt free ways, I can afford to buy outright more car than I could once have afforded the payments on. What will be interesting is, when I have that big chunk of cash in hand...will I part with it for a car? We'll see.
I looked online again for a reasonable car and yes, it is difficult to go from an Infiniti to perhaps a Toyota Echo (no offense!). But when I saw how inexpensive the Echos were, I was almost ready to sign on the dotted line. I think y'all are right - it's more psychological. If I can accept that it's wiser to be out of car debt than it is to look good in front of strangers/acquaintances, I'll be OK. My BF was even telling me that last nite. His thinking is- as long as the car works and can take me from point A to point B, who cares how it looks like.
To those who are thinking of leasing, please DON"T! That was the worst business mistake I ever made. I blame youth & immaturity, but it was really attributable to my wanting to keep up with the Joneses. Anyway, not only was I making the equivalent of a full-on car payment monthly, but I had nothing to show for it at the end of the leasing term since the payments were considered by the Bank as "depreciation costs." I did buy the car at the end of the term, but I felt like I was paying for another car all over again. The only upside is that the car retained it's fair market value and has a good resale value. Thus, I could probably try to sell it privately first OR trade it in and get a much cheaper car on the lot. I haven't decided yet.
So that's where I'm at right now. Thanks again for all your insight.
~Claire
Otherwise, since I have been 16, I have owned and driven used cars. I have had a variety. From my first car, a 1966 VW Bug that had a 6 volt battery and the heat controlled by 2 levers by the emergency brake to the car I drive now (I don't own it-yet. I will by December!), a 1993 Saturn.
What made the difference in my attitude, besides reading Dave Ramsey's books, is when I read "The Millionaire Next Door". It said that most all the millionaires interviewed for the book drove used cars. I was stunned-these people, who could drive ANYTHING, drove used cars?!?!? Dang! And then, I thought about Sam Walton-he definitely could have driven anything, but preferred his truck. So, although there are some people that consider cars to be status symbols, I don't. I figure that "you can't judge a book by its cover" isn't just a saying.
I also figure that when I am able to, I'm going to go buy that new car, if I still want one-in CASH. How sweet a deal that will be!
Lisa
I think I will be buying this book very soon. I am guilty of many of the Don'ts in this book. In the past, I didn't think anything of buying Manolos or LVs and I'm not even close to being a millionaire like these women! Isn't that crazy?! eeks....
DH just got an offer for a new job that will pay a good bit more than his current job. We were talking to my ILs about it and my FIL irritated me by saying that now we can get a new car. As much as we would love to get a newER car, right now we're trying to pay off our debt and save money to put toward a newer car. Just because DH has been offered a job that pays more doesn't mean we're going to run out and buy a new car. I don't know why that irritated me so much. Maybe it's because it's none of his business or maybe it's because his attitude about money worries me, but that's another story.
Anyway, we don't have the money to get any kind of a car right now, but we're going to save until one of our cars dies and either pay cash or get as small a loan as possible and we'll get a car that suits our needs and nothing more.
Amy
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