Downgrade car for car light financial dilemma [Archive]

Nick99

01-10-08, 01:54 PM

I am trying to live car light. I mainly drive to school twice a week, which is 30-40 miles away with no real safe routes there.

My dilemma is this: Before I was even aware you could live car light or car free i bought a new car, this is 3 months ago or so. Now I am downgrading everything and for reasons I won't get into I am moving and have to pay more for rent. On the plus side I will be in a better location for biking everywhere. Since i have this new car, I barely use it, and it costs a ton, but I am willing to pay for it. But I was thinking of trading it in for a smaller for efficient car. This would cost me less in payment, insurance, and gas. But in doing so i would lose $3000 on my current trade. So my new loan would be car cost + $3000.

I am stuck on buying a new car, since I have never had any luck in the past with used and I know if I can take care of a car from day 1 I can make it last 10+ years (I do my own work on them as well). But, should I do this downgrade even if it only saves me $100 a month in payment? I pay $500 now and could probably get something for $270-$300.

I have been so wasteful in the past with money and resources. It is finally catching up to me and being car light and tightening up my finances will be good for me.

Does anyone have any experience with this sort of situation? I can't get rid of the car because I still need reliable transportation to get to school, the bike repair shop, occasional large shopping trips for necessities, and in case of injury. Should I just pay on what I have or try to downgrade and take a hit on the depreciation?

Thanks in advance for any advice.

acroy

01-10-08, 02:35 PM

well you're stuck with the depreciation hit. Consider the depreciation a done deal, irreversable, and go from there.

What makes the most sense at this point? would the new (cheaper) car get better milage or cost less to insure?

I sure hear you on waking up one day wondering where all the money is and realizing I'd been squandering my resources. after a couple years of being car-lite (thinning the herd of cars & biking a LOT more), i finally have some savings!

Yer on the right track my friend :)

Cheers

kf5nd

01-10-08, 02:41 PM

try find other people to share it with who will help you financially

spider-man

01-10-08, 02:44 PM

A more efficient car would be an upgrade, not a downgrade.

Also, buying used isn't a matter of luck. If you have determined you want to own a car, get a used one that's in good condition, with low miles and service records, and that's still under warranty.

Artkansas

01-10-08, 02:48 PM

Well, you don't say how deep you are in debt. So only you can decide how much you need to cut back.

$500.00 a month for a car is a lot. That's greater than my rent. At the same time, if you sell you take a tremendous bath in depreciation.

By going car light, you may be able to save on insurance. Because I don't commute by car daily, my insurer gave me a discount. Check with your agent.

But then again, being car light, you don't need as much car. With some serious shopping, you may be able to get a car that serves you well for the interim. I bought a 1970 Chevy Nova with low mileage for $2,000 and it gave me 5 years of dependable service. If you are really car light, you won't be putting on that much mileage and a used car may do. A cheap new car will be tiny and cheap. You have to decide what will fill your needs.

For me. I bought a car for cash. Then my needs changed and I parked it rather than run up expenses. Two years later, I was out of debt!

GeorgeGlass

01-10-08, 03:57 PM

Buying a new car is about the worst thing you can do financially.

Forgetting about that for a moment, let's do a little math dropping down $200 of debt repayment a month. ($500 a month to $300 a month). It would take 15 months to recoup the depreciation hit you took when you drove that new car off the lot. So if your lease is for more than 15 more months, it makes sense to go ahead and trade for the lower payment, assuming you will drive the car into the ground and resale is not factored in. (And can't be factored in with the information provided).

Now let's stop forgetting. If you are truly living car light, why drive around a new car anyway? Ditch your car. Pay $3,000 for a nice used car. Assuming you don't have $6k laying around (the $3k hit on depreciation and the $3k for a new car), you'll get a loan. But instead of owing $30k or whatever you paid for your current car, you'll only owe $6k. That means you're $24k in the black.

And once you're debt free, you can pay your bank account your car payment, you'll get interest, and you'll never have a car payment again.

Many of the richest people in the world do not drive new cars. This is one of the ways they became rich. Maybe one of them will buy the car you sell!

Nick99

01-10-08, 04:05 PM

Well i am going to a dealer tonight to see how bad a depreciation hit I will take.
The thing is I love my current car (Subaru) because i can take it out in all weather conditions to trails I couldn't normally bike to etc. But that really isn't important if i can find people with cars who are willing to drive there.

My rent is doubling because my last situation didn't work out and i finally got into a place where i like the location and the place etc etc. I can walk to basically any store I need except for the bike shop. I would like to have a used car but even when I have a 3rd party mechanic look at it there is always engine damage you can't determine unless you run full compression and leakdown tests, which would get expensive testing even a couple of used cars (I can't stress reliable car enough).

In the end if the hit is too much I will just keep the Subaru and not have as much money every month. But I just hope I can get rid of it since it sits there most of the time. I am thinking of getting a new Hyundai Accent for 13k with 10 year warranty. This is assuming I can get a bike rack for it or 2 bikes can fit in it with the front wheels off.

I wish we had more public transportation around here. I would love to get rid of the car, but until I can work from home and move closer to school I really can't.

The only debt I have is student loans, a loan from my grandma (was for school), and my car. I got all my credit cards paid off last year.
So I guess I will see what happens tonight. I will check out there used inventory while I am there, maybe they will have a used Subaru wagon I can get on the cheap.
I will also have to check with my insurance, that would be sweet to get a discount.

eofelis

01-10-08, 04:33 PM

I've had very good luck with used Subarus for the last 15 years.

In 1994 bought a 1991 Legacy wagon with 88k on it for $9999 from a dealer. When the car went with my ex in 1999 it had 175k on it, having driven it all over the US with no problems.

In 1999 I bought another 1991 Legacy wagon with 113k on it for $5000 cash, private sale. I just recently sold it with 167k on it for $1250 (had some body damage, still running good). I drove it for 8 years with only general maintenance issues.

Just bought a 2001 Outback with 110k on it for $4600 cash, private sale. It looks and runs great. Planning on driving it for the next 10 years (car lite).

I decided $5k was the max I'll pay for a car.

So you can get good used cars. I have good general knowledge of cars, but I don't know much about mechanical stuff. Hard to go wrong with some types of cars.

coldfeet

01-10-08, 04:39 PM

As an alternative, is there a car-share group in town? Zip car or something? One bonus of that is that it usually preserves your insurance history, which would normally go to zero six months after giving up your car.

fordfasterr

01-11-08, 09:34 AM

A place called Car Max buys back cars at really good prices ...

My cousin bought a brand new Mercedez something or other and about 6 months later he sold it back to car max and broke EVEN.

Unreal, but true.

I say - get rid of the car all together and buy a motorcycle or scooter.

Then, for those big errands to the supermarket, use an Xtracycle or a trike as your > UTILITY BIKE !<

=)

When I finally got rid of my car back in August of 2006, I saved a lot of money... something like $ 450 / month on car payment + insurance not including gas or other car maintenance / usage related fees.

All the extra money allows me to really enjoy my life and just relax more.

Artkansas

01-11-08, 10:55 AM

Well i am going to a dealer tonight to see how bad a depreciation hit I will take.

One thing is for sure, you will take the worst depreciation hit at the dealer.

Nick99

01-11-08, 12:11 PM

Unfortunately there are no car sharing things around here. There is only 1 bus that holds maybe 20 people and it stops a few miles from where I live twice in the morning and twice at night during the work week.

I might try Carmax and private party sale is out of the question. I might just have to take the financial hit and learn my lesson. They had some decent used stuff that would fit bikes without having to buy a bike rack, so that is promising.

Im finding it hard to part with my car despite the fact I never use it, lol. Deep rooted conditioning I guess. But I have to remember I would be better off freeing up that money to buy healthy food as bike "fuel" and get decent bike stuff.

It looks like I might take appr a $4,000 hit on the car at the dealer. But I would free up like $200 a month. That is 20 months to recoup that cost just in payments. This would replacing it with a 14,000 ish used car with a warranty.

BillyBob

01-11-08, 05:52 PM

I second the idea of Car MAX and Driversway. I sold a 2-year old Mustang this summer that I KNEW that I would be underwater on. It was so bad that I sent my wife to Driversway to get the bad news for me. She came home with a price quote that was $700 more than we owed on the car. Needless to say, I raced back to dump it.

I hope to never have a car payment again.

mtnroads

01-11-08, 07:26 PM

I might try Carmax and private party sale is out of the question. I might just have to take the financial hit and learn my lesson. They had some decent used stuff that would fit bikes without having to buy a bike rack, so that is promising.

Why is a Private Party sale out of the question? That is how you will get the most for your car. A buyer will likely use a credit union to finance the car and they will take care of all the paperwork, paying off your loan, etc.

bigboots

01-12-08, 11:59 PM

I've been carfree since last spring and car light since about 2 years ago. Rode the bike in town for errands and my GPS said I went about 30 miles. I'm in my mid-forties. I sold my car for much less than it was worth and more than made up for it by being without it and it's expenses for almost a year. If you REALLY want to be carfree, though by your list of why the car is needed I doubt your ready, then sell it and payoff what you can and don't look back!! At least you're reading this forum, so it should be easier to go carfree in the future when you ARE ready, since you have the idea already in your lifeplan. Good Luck

CommuterRun

01-13-08, 05:30 AM

maddyfish

01-13-08, 09:06 AM

I am trying to live car light. I mainly drive to school twice a week, which is 30-40 miles away with no real safe routes there.

.

My only comment is this;

The safety is in the rider, not the route.

supton

01-13-08, 10:14 AM

I tend to agree; keep the car. It's what you want, and you have a known service history. Getting a different new car, only to lose money from depreciation, would only make sense to me if you were sinking in debt and this was the only way to keep from going under. Otherwise, a couple years of hardship and then it's paid for.

Do you have a roommate? or trustworthy neighbor who only needs a car a couple times a week? Maybe you can work something out where they pay you say 30 cents a mile or some such. What about a loan from a parent, that you could pay back at a later date or at a lower interest rate?

MrCjolsen

01-13-08, 10:40 AM

Look at it this way. If you keep it, in 5 years it will be in pristine condition with very low miles and probably command a pretty good price.

Another route is Carmax. I sold a car to them once and got as much cash as I was expecting to get if I sold the car private party - way above trade in value.

Roody

01-13-08, 12:36 PM

I am trying to live car light. I mainly drive to school twice a week, which is 30-40 miles away with no real safe routes there.
[....]
I am moving and have to pay more for rent. On the plus side I will be in a better location for biking everywhere.
[....]
I can't get rid of the car because I still need reliable transportation to get to school, the bike repair shop, occasional large shopping trips for necessities, and in case of injury. ....

I'm sensing that you're under a lot of stress right now, and car ownership is mainly adding to your stress. One great way to reduce stress is to get rid of the car, since that seems to be the cause of most of your stress. I can tell you from experience, losing that albatross is a liberating experience. Also, the savings are MUCH greater when you are carfree rather than carlight. Besides, you can NOT be carlight if you're commuting 60 to 80 miles a day. Sorry, the definition of "carlight" just won't expand enough to cover a long commute like that. You are definitely carheavy if you're doing that much driving!

If you're moving anyway, move closer to school. Then you won't need a car at all and you can be carfree. The main reason you really need a car now is for that long commute to school. The other "reasons" for needing a car that I put in bold are not legitimate reasons at all. All of those things can be done without a car, as many of us on this forum can attest. Scroll through the threads and you'll learn how to do your shopping, what to do in case of injury, how to get to the bike shop, and much more useful information for living happily without a car.

CHenry

01-13-08, 12:46 PM

From a financial standpoint, getting rid of a new car just to unload it makes no sense at all. In the long run, you will be better off if you keep the car, pay it off as soon as you can, and continue driving it until the wheels fall off. By then you will know for sure if you want to be car free. You can be car light and still own a car. The depreciation hit you will take will be a complete waste of money with nothing to show.

One of the benefits and goals in living car free is to save money. If you take a big depreciation hit on getting rid of a nearly new car you're not doing that.

Now, if it's money you want to get rid of then yeah, trading in the car is a good idea. Or even better, keep the car, send the money to me and I will send you a nice fruit basket and card. Which is a better deal than you will get trading in a 3 month old car.;)

Agree here. The depreciation is sunk cost; you lose the money and the asset value if you sell or trade. I am with the folks who recommend keeping the car. If you want to be free of the debt, pay down the car ahead of schedule with the savings from reduced driving. Call your insurers and tell them of your move and see whether you can get a break on the insurance premium. And take some consolation in the choice of your car which is one that seems to hold value well for a long time.

Nick99

01-14-08, 08:46 AM

Thanks again all for the advice.

I think it may be good to keep the car for now. I hope in the future to not even have a car, but that is contingent on finishing school and my indentured servitude at work. Basically I have to live in the area i live in until I can either work from home, or finish my grad degree and then finish my work obligation and move to Baltimore or some other non-rural area. I only have another couple years on my degree and then I have an 18 month obligation at my job after that. Then I can either stay there and commute by bike, or move to a better bike area and work and live in close proximity.

I definitely agree that the car is the source of most of my stress. So many financial decisions are based on having a car and then all of my financial stress is based on the car. I am hoping that my getting a grad degree will put me in a better situation overall and allow me the flexibility to negotiate job situations ideal for a bike lifestyle. But until then it is hard to escape this "just-make-it" life I get from a car ownership/consumerist lifestyle.

Of course I will still try Carmax just in case in works out in my favor and I can get something for the commute to school. I was able to come up with a solution for the bike shop problem, I will just ride with my dad when he goes there. And I think I can also bum a ride with my mom to Target/Walmart/Grocery for those big items. So simple, lol.

I think I am getting there, lol.

reddeno

01-14-08, 06:59 PM

Just a heads up from a fellow Subaru owner. Don't buy a 2.5L Subaru that is model year 1996-1999 that has not had the head gaskets replaced. The gaskets are of faulty design, but have not been recalled. I learned the hard way and had two other friends experience the same within three months.

More information is available here (http://users.sisna.com/ignatius/subaru/headgasket.html).

eofelis

01-14-08, 07:14 PM

TomM

01-14-08, 08:11 PM

Call your insurers and tell them of your move and see whether you can get a break on the insurance premium.

Beware, if you are moving to a new zip-code, your insurance may go up depending on how "safe" your neighborhood is.

acroy

01-15-08, 07:06 AM

Nick99

01-15-08, 09:19 AM

Just a suggestion that has not yet been aired here:

A good way to go car-light is to just rent one when you need it. You're paying $500/mo now on a car you barely use - that's a lot of money available for renting when you really need one. And no hassles with parking, worrying about scratching or dinging the new car, no maintenance, no insurance.... etc.

I think right now I can't do that. School is 2-3 days a week for the next couple years. That is also with me going right from work to night classes with barely enough time to make it there going 75 mph on the highway. Even if I could find the time to leave earlier, there is definitely no safe route I have found yet I would be comfy taking that much. All the routes are either people flying at 70+ mph or back roads with fast blind corners and no shoulder. I took one of these kind the other day (for a shorter local route) with several blinkies, a headlight, and all yellow clothing and nearly got killed at least 5 times in 20 minutes. But once school is over I won't need to go those places.

But in the future renting might be a good idea. Looking at Enterprise (near me) I can get a compact for $30-40 daily and an SUV/Truck for $50-60 daily. If I only needed it for a few days a month that would be more economical. Plus then if it broke down they would just come and get you or give you a new car to use.

dwainedibbly

01-16-08, 03:33 AM

Nick99

01-20-08, 03:25 PM

Is the car the source of your stress, or is the NEED for the car the source of the stress? Consider moving to within 10 miles of school if you can find a job in that area. If you can do that, the need for the car greatly diminishes.

I wish I could get a job close to school, but the problem is I am "indentured" in a way at my job. They are paying for school which also means that I have to work there for a certain period of time after school is completed or else pay back the school money. Its a situation, get a job near school, then no school money. Or if I don't go to school I would stand still in my career.

When I am done the school commitment at work, if I choose to leave there, I would probably just move close to work, a bike repair shop, and a grocery store and then be able to be completely car free.

The need for a car is definite stress, but I realistically only have 3 years left of that mess. This week I haven't touched the car since Monday, since school is between semesters. I only drove on Monday because I don't have a rear rack yet to transport my lunches to work (I cook for a week at a time).
So I definitely can be car free, it is just really the distance to school that is the real hindrance right now. Unfortunately work doesn't give me enough money to cover for the online schools that offer courses otherwise I would rather do that.

Platy

01-21-08, 09:51 PM

Car ownership makes it easy for a person to take on lots of widely scattered activities and scheduled commitments. Thus the car becomes essential, and that's how car dependency sets in. It's a self reinforcing pattern.

bizzz111

01-22-08, 09:00 AM

damn, the dealer must be drooling when they see you walk through the door. Just fyi, the dealer never does anything FOR you, just TO you. You need to start treating the dealer as an adversary rather than a friend.

Sell the car privately ASAP. Probably cut that $4k depreciation in half (or more). Then buy a cheap folder (xooter swift?) and get good at taking the bus for a couple of years until you can build up a big enough nest egg to afford a quality used car. If your goal is really to become car free, you'll need to learn to love the bus anyways. A couple mile bike ride to the bus stop is cake.

And never, ever go to the dealer again unless you are ready to wage war.

Roody

01-23-08, 12:21 PM

I wish I could get a job close to school, but the problem is I am "indentured" in a way at my job. They are paying for school which also means that I have to work there for a certain period of time after school is completed or else pay back the school money. Its a situation, get a job near school, then no school money. Or if I don't go to school I would stand still in my career.

When I am done the school commitment at work, if I choose to leave there, I would probably just move close to work, a bike repair shop, and a grocery store and then be able to be completely car free.

The need for a car is definite stress, but I realistically only have 3 years left of that mess. This week I haven't touched the car since Monday, since school is between semesters. I only drove on Monday because I don't have a rear rack yet to transport my lunches to work (I cook for a week at a time).
So I definitely can be car free, it is just really the distance to school that is the real hindrance right now. Unfortunately work doesn't give me enough money to cover for the online schools that offer courses otherwise I would rather do that.

One attribute you need to be carfree is flexibility. For example, you're accustomed to taking a week's worth of lunches to work, but you really don't have to do it that way. You could stick one day's lunch--a sandwich or a tupperware--in your backpack, or even your pocket, each day. That's what a lot of people do, including myself.

I see you possibly as somebody who is a little rigid about doing everything a certain way. This mindset doesn't always work well with a carfree lifestyle. I suggest that you keep your car and try not to feel guilty about it. This life really isn't for everybody.

Best of luck in whatever you decide. :)

Newspaperguy

01-26-08, 10:45 AM

But in the future renting might be a good idea. Looking at Enterprise (near me) I can get a compact for $30-40 daily and an SUV/Truck for $50-60 daily. If I only needed it for a few days a month that would be more economical. Plus then if it broke down they would just come and get you or give you a new car to use.
Renting a car isn't cheap. I learned that the hard way seven years ago. The daily rate isn't the only price you'll have to pay. Check carefully before you use this option.

Cyclaholic

01-26-08, 06:42 PM

I wish I could get a job close to school, but the problem is I am "indentured" in a way at my job. They are paying for school which also means that I have to work there for a certain period of time after school is completed or else pay back the school money. Its a situation, get a job near school, then no school money. Or if I don't go to school I would stand still in my career.

When I am done the school commitment at work, if I choose to leave there, I would probably just move close to work, a bike repair shop, and a grocery store and then be able to be completely car free.

The need for a car is definite stress, but I realistically only have 3 years left of that mess. This week I haven't touched the car since Monday, since school is between semesters. I only drove on Monday because I don't have a rear rack yet to transport my lunches to work (I cook for a week at a time).
So I definitely can be car free, it is just really the distance to school that is the real hindrance right now. Unfortunately work doesn't give me enough money to cover for the online schools that offer courses otherwise I would rather do that.

Why can't you sell the car privately and buy a motorbike for your trip to school? It's fast enough to get you there on time and cheap to run.

spider-man

01-26-08, 07:01 PM

Why can't you sell the car privately and buy a motorbike for your trip to school? It's fast enough to get you there on time and cheap to run.

Slightly off topic here, but for whatever reason, the motorcycle is widely regarded as merely a toy in the States, not as viable transportation.

Roody

01-26-08, 07:57 PM

Slightly off topic here, but for whatever reason, the motorcycle is widely regarded as merely a toy in the States, not as viable transportation.

Here in the north, motorcycles are not viable transportation for almost half the year. At least I don't remember ever seeing one on the roads in wintertime in 50 years. OTOH, many of us ride our bicycles year round. Personally, I don't like motorcycles any better than cars. Give me a bicycle any day.

spider-man

01-26-08, 08:49 PM

Here in the north, motorcycles are not viable transportation for almost half the year. At least I don't remember ever seeing one on the roads in wintertime in 50 years.

I'm not making a car vs. motorcycle argument here, but in similar latitudes in Europe, motorcycles are used year round to great effect. Just because you don't see them where you live doesn't mean they're not viable.

Roody

01-27-08, 12:17 AM

I'm not making a car vs. motorcycle argument here, but in similar latitudes in Europe, motorcycles are used year round to great effect. Just because you don't see them where you live doesn't mean they're not viable.
Sorry, I don't believe you. Where in Europe have you seen this? And what exactly did you see?

spider-man

01-27-08, 12:36 PM

Sorry, I don't believe you. Where in Europe have you seen this? And what exactly did you see?

In Paris, I have seen beaucoup commuters using motorcycles and scooters as practical transportation in all weather in all months of the year.

I'm not sure how far north you're talking about, but in Fairbanks, Alaska, I knew of an old feller who would ride his airhead BMW year round. (I also was good friends with several car-free/motorcycle-free, year-round bicycle commuters there. Many residents would insist that neither motorcycles nor bicycles were viable year round, and yet there they were.) There's also, in the University of Alaska Fairbanks Museum, an old BSA motorcycle that a gentleman rode from Barrow to Tierra del Fuego, leaving in the middle of winter, in the 1930s.

This off-topic debate stems from precisely the point I was trying to make: that motorcycles are generally considered toys here in the States. When the weather turns foul, most Americans will opt for the Ford Exploitation instead. As a result of that, you don't see them in the winter; as a result of not seeing them, you presume they are not viable.

Roody

01-27-08, 12:53 PM

In Paris, I have seen beaucoup commuters using motorcycles and scooters as practical transportation in all weather in all months of the year.
[....]
As a result of that, you don't see them in the winter; as a result of not seeing them, you presume they are not viable.

I did presume that, since I literally have NEVER seen a motorcycle in the winter and I've been alive for 52 years. Funny that out of millions of motorcyclists, only the ones in Paris (and one old fart in Alaska) have figured out that they're great winter transportation. I know I wouldn't want to be going very fast on two wheels if I hit some black ice! 60 mph wind chills would be another factor, although snowmobilers get around that one.

spider-man

01-27-08, 01:30 PM

I did presume that, since I literally have NEVER seen a motorcycle in the winter and I've been alive for 52 years. Funny that out of millions of motorcyclists, only the ones in Paris (and one old fart in Alaska) have figured out that they're great winter transportation. I know I wouldn't want to be going very fast on two wheels if I hit some black ice! 60 mph wind chills would be another factor, although snowmobilers get around that one.

To presume that the examples I submitted are the only ones who have figured out motorcycles are viable (I don't believe I said great) winter transportation is incorrect. For further examples, see the year round riders at http://www.yearroundriders.com/

Roody

01-27-08, 02:33 PM

To presume that the examples I submitted are the only ones who have figured out motorcycles are viable (I don't believe I said great) winter transportation is incorrect. For further examples, see the year round riders at http://www.yearroundriders.com/

I see that the Yearrounders hold their big annual ride in late April.

BRRRR!! :rolleyes:

CommuterRun

01-27-08, 03:28 PM

When I'm riding and I see a motorcycle on the road in sub-freezing weather the thought that goes through my head is, "He has got to be freezing.":D

Newspaperguy

01-27-08, 03:49 PM

When I'm riding and I see a motorcycle on the road in sub-freezing weather the thought that goes through my head is, "He has got to be freezing.":D

And yet, when I'm on my bike, I don't feel cold, even if the temperature is well below freezing.

Roody

01-27-08, 05:03 PM

And yet, when I'm on my bike, I don't feel cold, even if the temperature is well below freezing.

Ssshh! That's our little secret. They won't think we're all crazy and brave if they find out.
;)

TheFool

01-28-08, 02:34 PM

Another reason to switch cars is to switch to a hatchback or wagon, so you can use the car when you need to move large objects or a bunch of friends/family members and just can't use a bike. I also recommend buying used. Get a certified used car from a dealer. Plus, it's an economy or a basic car with no options they just happened to get as a trade-in, the dealer may not even be terribly interested in making a lot of money on it.