Used car purchase
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| Tue, 04-19-2005 - 11:45am |
In the divorce property settlement, I got the Toyota Minivan with a whopper of a note...$490 per month. It's really hard for me to pay that each month and with the price of gas these days, I'd love to downsize into a smaller used car. Problem 1, not much $$ for down payment. Problem 2, lousy credit score due to financial divorce wreckage. It's now paid down to where it's nearly a wash between loan payoff amount and trade-in value, so I'm gonna start looking at used cars.
I've always bought new cars with good credit before and don't know how to go about this. I'd like to get a 4dr (something reliable) and limit my monthly payment to no more than $250. Can this be done? How do I start? With a finance co. or at a used car dealership?
I'm on a mission to reduce any monthly expenses I can, so I can save $$ and pay down on CC debt.
Any suggestions would be appreciated.
Cupcake

I have been looking at the exact same thing myself. I am most concerned with reliability and fuel economy. Consumer Reports and Edmunds have their ratings of reliability, and http://www.fueleconomy.gov rates gas mileage. I owe a little less than my Altima is worth but I want small/no payments. I am looking at getting a '98 Dodge Stratus. It's a CR "recommended family car" and gets really good gas mileage.
As for financing, I don't really know about all the options. I belong to a credit union and I know I can just go in and try to get pre-approved for a car loan, then I can shop around. We're going to try to pay cash, though, because even though it would be smarter to get the low car loan rate and pay the money to higher-interest debt, we really just don't want to worry about car payments.
Are you a member of a credit union?
All my best,
Danni
I second the motion to do a private party sale--you will get much more money for your car. The downside is that you may be without a car for a few weeks while you shop for another car. See if someone in your church, at work, or your circle of friends would be willing to loan you a car for a few weeks. When we have two cars, we frequently loan one to friends to meet short-term needs (I'm a sahm, so I don't need the car every day).
Alternately, you may find that renting a car would cost less than the amount of money you would gain by doing a private party sale rather than a trade-in. Most places, a rental car is around $150 for a week, unlimited mileage. You may get several thousand additional dollars for your car--that's a lot of weeks of renting! LOL
I don't know how to help you with the loan. We have been very blessed in that our cars have always held their value above what we have owed on them. So right now what we have just done is sold a Camry and are looking for a very inexpensive used car to purchase with cash--no car payment! The "new" car will cost about half what we got for the Camry (which we owned free and clear--which I cannot mention without mentioning also that in this instance, we were extremely blessed by a wealthy Aunt who gave us the car when we were in a crunch--a sort of early inheritance, which I am extremely grateful for), and the remainder of the money will be split between a utility trailer and hitch for me (for hauling lumber, manure, and other gardening/home improvement materials), paying a little extra debt, and setting money aside for car repairs and other automobile-related expenses.
If you do a private party sale, you should have some cash left after you pay your loan. You might consider doing some research on a reliable car to buy second-hand for cash. For even two or three thousand dollars you can buy a perfectly serviceable, reliable 1980s Mercedes or, perhaps better yet, a VW with an air-cooled engine. Air-cooled engines are both cheap and easy to repair (an brand new engine for the 1970s VW Thing costs about $300, and can be installed by anyone with even a small amount of handiness, a few simple tools, and a driveway to work in), so they are a good bet when buying old vehicles. And the small older cars get good gas mileage--three cylinder engines don't burn much, lol.
If you *do* go that route, though, make sure you do your homework, and have the car inspected by a qualified mechanic prior to purchase, so you don't end up throwing your money down the drain. And then, set aside the money you would have been sending to car payments for repairs that may come up. You will most likely find that that cash will build you a sizeable "safety net" quite quickly, and then you can channel those "car payments" to a "new car fund," or to paying down your debt, and *then* to a "new car fund" (unless you fall in love with your 1970s VW Thing, in which case you can channel the money to pimping it up with new neon paint, spinning wheel covers, and flashing lights on the wiper blades :))
Good luck with whatever you decide. $490 is a hefty payment. Which actually reminds me of another possibility--depending on how old the vehicle is, you might also be able to refinance and, depending on how attached you are to this particular vehicle, might be a good option. We did that three years ago with our Subaru Outback, and reduced our monthly payments from $450 to just over $300. Because we had researched so carefully, we knew it was a car we wanted to keep, and although refinancing meant we'd be paying for it for a long time, it freed up enough cash at the time to get us through a really rough time. Now we are doing much better, and we are glad we kept the vehicle, as it would have cost us more in the long run to sell it, buy something else, then sell that and buy another Subaru.
Good luck and blessings.
Heather
I totally agree with you.
It seems a lot. My mortgage is $491.....
But, you also need a decent car, reliable.
I'd look at a sedan thing, I really like the mazda3.
If gas gets to 2.75, I'm gonna abandone my boxster dreams
and get a 1991 CRX HF, 55 mpg.
If you have kids that is not an option, I know this.
As a sidde note, we had 70s VWs when I was little. I do not
feel deprived. In fact, I feel I learned the value of a gallon
of gas.