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  1. #1
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    Downgrade car for car light financial dilemma

    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.
    I like bikes!

  2. #2
    Senior Member acroy's Avatar
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    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

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  3. #3
    Senior Member kf5nd's Avatar
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    try find other people to share it with who will help you financially

  4. #4
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    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.
    One thing about living in Santa Carla I never could stomach -- all the damn vampires.

  5. #5
    Pedaled too far. Artkansas's Avatar
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    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!

  6. #6
    Senior Member Ghoulardi's Avatar
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    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!

  7. #7
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    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.
    I like bikes!

  8. #8
    The Rock Cycle eofelis's Avatar
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    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.
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  9. #9
    Senior Member coldfeet's Avatar
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    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.

  10. #10
    One speed: FAST ! fordfasterr's Avatar
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    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.
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  11. #11
    Pedaled too far. Artkansas's Avatar
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    Quote Originally Posted by Nick99 View Post
    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.

  12. #12
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    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.
    I like bikes!

  13. #13
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    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.

  14. #14
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    Quote Originally Posted by Nick99 View Post
    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.
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  15. #15
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    U sound like 99% of americans out there...

    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

  16. #16
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    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.
    Last edited by CommuterRun; 01-13-08 at 05:53 AM.

  17. #17
    Senior Member maddyfish's Avatar
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    Quote Originally Posted by Nick99 View Post
    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.
    Not too much to say here

  18. #18
    Cries on hills supton's Avatar
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    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?
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  19. #19
    Senior Member MrCjolsen's Avatar
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    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.

  20. #20
    Sophomoric Member Roody's Avatar
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    Quote Originally Posted by Nick99 View Post
    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.


    "Think Outside the Cage"

  21. #21
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    Quote Originally Posted by CommuterRun View Post
    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.

  22. #22
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    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.
    I like bikes!

  23. #23
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    Heads up

    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.

  24. #24
    The Rock Cycle eofelis's Avatar
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    Quote Originally Posted by reddeno View Post
    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.
    Good tip! I specifically shopped 2000 or newer because of this.

    http://subaruoutback.org/forums/ is a good place to check out
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  25. #25
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    Quote Originally Posted by CHenry View Post
    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.

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