how do you handle car loans?

Avatar for aerandel
iVillage Member
Registered: 03-25-2003
how do you handle car loans?
12
Mon, 01-30-2006 - 9:53am
Hi everyone. I am excited about the idea of paying down my debt and becoming debt free. Right now I have two "stages" to my plan. The first is to pay off my cc debt and my current car loan, which totals 7200 dollars. Then I will begin to tackle the student loan debt, which currently totals about 48K. I will jump on the private loans first as they have a higher interest rate and save the federal loans for last. Anyway, I only have 5 payments left and a balance of 1065 on my car loan. At that point I intend to start saving for a down payment on another car, but I doubt I will end up with much set aside before my current car needs replacing. I hate the idea of taking on another car loan when I'm struggling to be "debt free". I guess certain things like my car loan, mortgage, and student loans are those kinds of things that I will have to accept and perhaps not consider them when I consider myself debt free. What do you all think? Do you try to avoid car loans? I guess I'm just frustrated at the idea of finally paying off a substantial debt only to turn around and take on another loan and start over again. Ugh! I guess I will just continue to save up as much as possible to put towards a new car.

                          

             

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iVillage Member
Registered: 03-27-2003
Mon, 01-30-2006 - 10:23am

Ideally, I long to be car-loan free. Right now, we are about $5000 from that goal and, with luck, we won't have to take out another loan again.

But life is a journey, not a destination, and I feel the same way about debt-free. It's about taking it a day at a time, a step at a time, and doing the best we can. If that means you take out a small car loan so you have transportation so you can go to your job so you can continue paying your responsibilities--well, that's what it means then.

But of course, you can do things to minimize even that type of loan. How tempting it is, when shopping for a "new" car, to get something "just a little nicer," with a few extra features. Or to let the used car sales guy talk you into walking over to the new car section, "just to look." But if we keep our goal in sight, we can choose a car that makes sense for us and for our pocket books.

Eventually, if we keep on the path, we won't have car loans or mortgages or any other kind of debt. But you don't have to make that goal today or even tomorrow. As long as you're always making progress *toward* it, you're doing great.

Blessings,

Heather

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Mon, 01-30-2006 - 10:26am

DH and I have both committed that we will never, ever, ever buy a "new" car again.

All my best,
Danni

Avatar for cl_beckymk
iVillage Member
Registered: 03-19-2003
Mon, 01-30-2006 - 10:27am

I *hate* car loans!

iVillage Member
Registered: 06-23-2005
Mon, 01-30-2006 - 10:43am

Once your car is paid for, I would continue setting that money aside for your next car. Then wait until you absolutely, no choice in the matter, HAVE to buy the next one. Even if you cannot afford to pay cash for the entire thing, at least you'll have something towards its purchase. And when you do buy, I would not buy new. We've done the brand new, 5-yr loan thing and it's not fun. By the time 5 years is up, you are SOOOO tired of car payments and SOOOO tired of the car itself. DH still thinks he "deserves" that brand new truck he's always wanted, but for me- I've BTDT and learned my lesson.

And whatever you do, do NOT let someone talk you into a lease. Those are major trouble waiting to happen.

iVillage Member
Registered: 01-25-2006
Mon, 01-30-2006 - 11:20am

Hi there,
You don't mention why you think you will need a new car so soon after paying it off but my first inclination was to advise you to drive the car as long as possible. I spent some time on the Motley Fool boards on a trial basis this month and a ton of stuff was posted all the time about 'find a way to drive your car into the ground' essentially. I also agree that buying a brand new car is a money pit from which you cannot return...the depreciation is just awful and at least for me, the new wears off LOOOOOONG before the payments stop. For me, like 58 months before!

I personally try to find the lowest mileage used car of the type I want in the budget I want to spend. So sometimes that means going a year older to get the price down when I want the lower mileage. I bought my current Subaru Outback with 32k miles on it. It is a '99 and I bought it in 2003 for around $11k. I still borrowed but on a 3 year loan with only a $215 payment and I plan to pay it off early this year. You have to be in a position to shop and wait to find that kind of mileage but really it is the mileage not the years that matter. I also used a buyer broker (best $300 I ever spent in a car deal) to locate the car for me. He shopped nationwide and even with the possible shipping costs (which I managed to avoid luckily) and his fee, I still was money ahead because he found such a great car at such a great price. And the only reason I talked to a salesperson was to test drive an Outback and a couple other cars I was considering before sending my broker out to look.

I am in virtually the exact same place you are financially w/student loan, cc and car debt. My plan is to pay off all the cc and car loan debt this year, apply the snowball to my student loan for years to come and start tucking some amount away for a car in 5+ years. Barring a wreck (knock on wood), I will be able to easily get that many more miles out of my Subaru.

HTH!

Peg

Avatar for aerandel
iVillage Member
Registered: 03-25-2003
Mon, 01-30-2006 - 11:40am
Thanks to everyone who posted! My car is a 1999 neon, and it has about 78K miles on it. It's not in bad shape and it still runs great so my plan is to do exactly that, drive it into the ground. But being that it *is* a neon, which are not known for lasting all that long, I am estimating low on how long I will have left to drive it. I think I will do that though...continue to put my 200 dollars a month that I pay towards my loan into savings after the loan is complete. I could end up with a pretty sizable amount by the time I need a new vehicle then! (new meaning, new to me but definately a used car!!!) Thanks for the help!

                          

             

iVillage Member
Registered: 10-10-2003
Mon, 01-30-2006 - 11:47am

To a degree a view car loans as nessecary evil. I live in the middle of the boonies and am very reliant on my vehicle to get me anyplace! However, there are several things I have learned.

Don't ever lease!! (especially with kids!)
Opt for as short a payment plan as you can, 3 years is so much easier than 5 to take!
Buy used whenever possible!
Avoid gizmos! I seem to have bad luck with gizmos, they are always the things that break and are very expensive to get fixed.

I doubt that we will ever manage to be totally car loan free, but I would like to only have one at a time. We should be able to achieve this this fall and hopefully we will be able to continue to drive our van for awhile.

My debt free goal is to be free of all consumer debt...credit cards, line of credit.

iVillage Member
Registered: 10-10-2005
Mon, 01-30-2006 - 11:49am

I'm kind of in the same boat, only I will probably trade the car in I have or sell it before I have it paid off. It is such a lemon and I'm making $400 a month payments on it. I'm facing another $700 repair bill this coming month on the blooming thing. I'm just at the end of my rope with it. I can't get ahead because once I get any money saved up something else goes wrong with it. So I'm gonna have to take out a loan. : -( I'll do the best I can though, and look for a loan with a great interest rate, and a lower cost car. It does tick me off though I was planning on paying off this car then not having a car payment for a while, but even if I got the thing paid off something else would go wrong with it.

I have a Buick Rendevous right now. Please everyone take my advice, never, ever buy one of these cars. The guy at the repair shop sees them in all the time with all kinds of problems due to poor design.

I'm gonna have to chalk this up to a lesson learned. Once I get this last repair done and enough saved up for sales tax I'll go ahead and unload the blooming thing. It's on my list of things to do this month, to start looking into reliability ratings and such and try and find a car that is much more reliable than this one.

iVillage Member
Registered: 03-27-2003
Mon, 01-30-2006 - 12:16pm

I think I would try to buy used and save as much as possible BUT I'm married to someone who views car loans and mortgages as an inevitable part of life. He went through several used cars in high school and college due to mechanical problems and truly believes that he spent more on that process than he does on buying new cars (although we did drive program cars for a long time at least). We currently have an convertible that was given to us by his dad which DH loves and I hate (lots of emotional stuff tied into that car) and then a Jetta station wagon that we bought new (resisted most of the extras though) and even though it's 3 years old I still feel like it's my new car-I love my car! We would like to drive it as long as possible and then hope that hybrids have gone down in price and have a wider variety.

Taleyna

Avatar for endomagazine
iVillage Member
Registered: 11-09-2004
Mon, 01-30-2006 - 12:25pm

Hello,

I'm glad you are considering saving up for your next car. Anything you can contribute as a down payment means less interest you pay later! We have a 1999 Honda CRV which has required a total of $1000 in repairs during the 5 years we've had it. The repairs were from damage incurred in two car accidents 2 years ago. It's never had to go to the shop for more than the usual maintenance. We have 114,000 miles on it and paid it off last year. I'm hoping that it continues to run fine (which I can expect considering the history) for as long as possible.

We do have some savings and a freedom accounts, so next year I plan to start a "new car" freedom account. I want to reduce the balance on our credit cards first. I can definitely suggest that you pay off your car loan as soon as possible. The insurance requirements for a paid-off car are different than those on a car with a loan. I raised my deductible and changed the coverage immediately after paying off our car, which saved us $750 in insurance costs.

Sincerely,
Lindsey Schocke

Sincerely,
Lindsey Schocke

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